The government’s decision not to bailout Lehman Brothers–or, as Hank Paulson now says, its conclusion that Lehman couldn’t be bailed out–still gets a bad rap. A lot of this is based on the old post hoc, ergo hoc fallacy: because financial turmoil accelerated after Lehman’s collapse, it must have been caused by the collapse. But if you look closely enough, a lot of elements of Lehman’s unwind seem to be going very smoothly.
Bloomberg reports today that Goldman Sachs, Coller Capital and Lexington Partners are considering Lehman’s investments in US and European private equity funds, including its stake in D. E. Shaw. Lazard got tapped to manage the sale of what might be as much as $15 billion in assets.
From Bloomberg star reporters Jonathan Keehner and Serena Saitto (not online yet):
Goldman Sachs Group Inc., Coller Capital and Lexington Partners Inc. are weighing bids for Lehman
Brothers Holdings Inc.’s investments in U.S. and European private-equity funds, people with knowledge of the matter said.
Lehman is trying to sell stakes in real estate, merchant banking and venture-capital funds with about $15 billion of assets, according to the people, who declined to be identified because the talks are confidential. The venture capital portion is expected to be sold by November, the merchant holdings and real estate by year end. As many as a dozen potential buyers have indicated interest, one of the people said.
The disposals may lead a wave of so-called secondary sales, as investors seek to buy others’ stakes in private-equity funds at distressed prices. Between $12 billion and $15 billion of secondary interests changed hands last year, and the figure may double in the next 12 months as banks with credit-market losses try to raise cash and pare hard-to-value holdings, according to Coller Capital’s Frank Morgan.
“I don’t know of a bank that’s not considering selling non- core assets including private-equity interests,” said Morgan, a Coller partner in New York. The London-based firm invests in buyout and venture-capital funds and raised $4.8 billion last year for a fund targeting secondary sales.
Morgan declined to comment on the pending Lehman sale. Representatives of New York-based Lexington, which oversees $10.2 billion of secondary private-equity funds, and Goldman Sachs, which raised $3 billion last year for a fund that invests in secondary sales, declined to comment.
For those of you keeping score at home, the stakes in DE Shaw and other funds were left behind when Lehman sold most of its investment management business to private-equity firms Bain Capital LLC and Hellman & Friedman LLC on Sept. 29. Those assets, including the Neuberger Berman business, are themselves so in demand that the sale is being challenged by Carlyle Group, which may make its own bid in December, according to Bloomberg.