Lehman Private Equity Assets Fall 6.9%

AMSTERDAM (Reuters) – Lehman Brothers Private Equity (LBPE.AS: Quote, Profile, Research, Stock Buzz) said its net asset value fell 6.7 percent in the first 10 months of 2008, losing 3.2 percent in October alone as the fund’s outlook remained cautious given persistent market volatility.

The private equity fund said net asset value at Sept. 30 fell 3.5 percent to $538.8 million, or $10.01 per share, due to a $22.2 million fall in the value of credit-related investments and traded securities. Interest and dividend income also fell.

There was no price for the thinly-traded fund on Amsterdam’s exchange on Monday, with shares still quoted at Friday’s close of $2.70. They are down 73 percent from their year-high of $9.9 set in early January.

“Given the volatility in the financial markets and the downward pressure on the economy, we continue to remain cautious until the market demonstrates signs of stabilizing and the outlook for private equity becomes clearer,” the fund said in a statement.

LBPE is the latest private equity fund to encounter headwinds from the global financial crisis, after Kohlberg Kravis Roberts & Co. delayed plans last week to go public after its Amsterdam-listed affiliate suffered big investment losses.

The Lehman fund said losses in the third quarter continued into October as net asset value per share fell further to $9.68 due to the continued declines in the equity and credit markets, representing a 6.7 percent fall in net asset value from the end of 2007.

But the Dutch-listed fund of funds, whose investments include Apollo Investment Fund, Candover 2005 Fund and Blackstone Capital Partners, said it still believes dislocations caused by the credit crunch will provide attractive opportunities for distressed funds and buyout investors.

An affiliate of collapsed US bank Lehman Brothers said private equity funds Bain Capital Investors and Hellman & Freidman have agreed to buy a part of Lehman Brothers’ investment management division in a transaction that will give them indirect control over a new investment advisor for LBPE.

The deal is to be completed in the first quarter of 2009, but LBPE said an auction will take place on Dec. 3 followed by a hearing of a US bankruptcy court on Dec. 22 to consider approval of the successful bidder.

(Reporting by Aaron Gray-Block; editing by John Stonestreet)