Private Equity groups Bain Capital, Hellman & Friedman, and Kohlberg Kravis Roberts have been told by Lehman Brothers that they are still in the running for Lehman’s asset management arm Neuberger Berman. The FT says that offers from two other PE groups, Carlyle and Blackstone, are no longer being considered:
Carlyle offered to buy the entire Lehman asset management business and give Lehman the right to buy it back in the future. However, its bid of about $7bn was considered too low.
Blackstone had little interest in Lehman’s hedge fund stakes and was worried about the costs associated with keeping Neuberger managers from leaving, said people close to the matter.
A Neuberger acquisition would help KKR fulfil its ambition of building a diversified asset management business as it moves toward a New York listing. But until KKR is listed, it lacks the currency to buy Lehman’s assets, which means it would be more likely to acquire the operations through its funds
Lehman CEO Dick Fuld is apparently leading the talks himself, because he doesn’t trust anyone anymore.
Lehman’s talks with private equity firms have been conducted in secret and largely directed by Dick Fuld, its chief executive. “Lehman does not trust anyone these days so it has always been direct communication,” one potential buyer said.
Analysts say the situation at Lehman reflects the uncertainty over the size of its writedowns. JPMorgan last week estimated the writedowns could total $4bn, but people familiar with the situation say they could be bigger.
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