Lehman Sends Asset Management Biz Book to PE Firms

NEW YORK (Reuters) – U.S. investment bank Lehman Brothers Holdings Inc is considering options, such as selling all or part of its asset management unit, with an aim of reaching a deal by the time it releases third quarter earnings, sources said.

Analysts and bankers have recently said that Lehman may opt to part with its asset management business to further boost its capital. Experts estimate the business, whose core is Neuberger Berman, could be worth about $8 billion.

It was not immediately clear if all or part of the investment management business would be sold. Some have said an outright sale of the entire investment management business could be tough, as it would be too big for most buyers to swallow.

One source familiar with the situation said Lehman is marketing its asset management unit to a number of buyers including private equity firms.

A second source said Lehman is looking at several alternatives including selling a stake in the business, and is aiming to have the strategy resolved by the time it announces third quarter earnings.

The end of Lehman's fiscal third quarter is less than two weeks away, and the bank typically announces its third-quarter earnings in mid-September.

In June, the bank posted its first quarterly loss as a public company, of $2.8 billion.

Lehman declined to comment.

The Wall Street Journal, quoting people familiar with the matter, said Lehman has begun circulating a detailed book on financial information about its investment management unit to a group that includes private-equity firms Carlyle Group, Hellman & Friedman LLC and General Atlantic LLC. Blackstone Group LP also has expressed interest in the business in recent weeks, the report said.

The Journal report said the Lehman unit would include Neuberger Berman, as well as the firm's private-client, hedge-fund and private-equity businesses, adding that analysts estimate the total value at around $8 billion to $10 billion.

The New York Times said Lehman's letter to possible buyers said interested parties could bid for all or some of the pieces but encouraged them to make an offer for the whole business.

The Times said Lehman sent letters to Kohlberg, Kravis & Roberts, J. C. Flowers, and Apollo Management in addition to Blackstone and the Carlyle Group.

Wall Street banks have been battered by their exposure to mortgage-backed securities and other risky instruments, which have triggered write-downs and credit losses.

The fourth-largest U.S. investment bank has raised about $12 billion of capital this year to strengthen its balance sheet, sold off assets, and shaken up top management.

Lehman bought Neuberger Berman in 2003 for about $3.1 billion.

Earlier this month, reports said Lehman is in talks with prospective buyers including BlackRock Inc to sell mortgage assets and other hard-to-value securities.

By Megan Davies and Paritosh Bansal

(Additional reporting by Ritsuko Ando in New York; Editing by Louise Heavens)