Lehman Brothers (LEH) is openly soliciting bids for its wealth management business, including Neuberger Berman, says the WSJ. It’s not clear whether Lehman will offload all of the $8 to $10 billion asset, or just part of it. It is clear, however, that Lehman needs more cash. (The latest estimate of Q3 writeoffs has soared over $4 billion)
Who are the prospective buyers? The usual crowd of private equity firms. WSJ:
Lehman has begun circulating a detailed book of financial information about the investment-management unit to a group that includes private-equity firms Carlyle Group, Hellman & Friedman LLC and General Atlantic LLC, people familiar with the situation said. Blackstone Group LP also has expressed interest in the business in recent weeks, other people familiar with the process said.
The estimated value of Lehman’s investment-management businesses is around $10 billion, which almost exceeds the total market captialization of Lehman Brothers as a whole. Lehman desperately needs cash to plug holes in its collapsing balance sheet. Estimates for its Q3 loss range from $1.8 to $4+ billion, and the firm still has significant exposure to mortgage-backed assets.
Lehman’s asset management business is just about the only part of the company that is still profitable, and some fear that Lehman could be forfeiting huge profits in the future if it offloads it. Still, it’s better than going bust.
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