IDD Daily Updates and Restructuring Alert Weekly Updates, our email alerts
Rumors Of Lehman Sale Swirl
Private equity investors such as Carlyle Group, Hellman & Friedman and General Atlantic are said to be sniffing around the business, as is Blackstone Group.
August 19, 2008
Lehman Brothers may be close to the sale of its investment-management arm, a business that includes Neuberger Berman, in an attempt to generate some much needed cash. A Lehman spokesperson declined to comment on the possible divestiture, which was reported in Tuesday's Wall Street Journal.
Private equity investors such as The Carlyle Group, Hellman & Friedman and General Atlantic are said to be sniffing around the business, as is The Blackstone Group, according to reports. "From a private equity standpoint, if there's a seller who needs to sell and a target that has predictable cash flows, they can lock in some nice returns for their investment," says Michael Rosella, chair of the investment management practice at Paul Hastings.
Lehman recently reported second-quarter net revenues in its investment management business of $800 million, down from $1 billion in this year’s first fiscal quarter. Asset management revenues came in at $500 million, down from $600 million last quarter. Assets under management in the most recent quarter were $277 billion, in-line with the first quarter.
Last year, Lehman grew its investment management revenues by 28% to a firm-record $3.1 billion. Within that group, alternative and private equity related sales grew by more than 20% individually. Assets under management also increased, up 25% from the previous year to $282 billion. Lehman acquired Lighthouse Capital Management, a leveraged loan investment manager with some $3.2 billion under management, last summer.
JPMorgan lowered its profit forecasts on Lehman Tuesday after the rumors of the sale began circulating, but does not anticipate a sale. "We don't think the investors and rating agencies would welcome this divestiture, which brings a steady cash flow, diversification and a lower compensation ratio," said analysts Kenneth Worthington and Funda Akarsu in a research report.
Shares of Lehman were recently off 9% at $13.66.
For more information on related topics, visit the following:
