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One Year Later: Where Are The PE Arms of Failed Banks?

The Internet is alive with the sound of memorializing. There’s no shortage of retrospective Lehman Brothers coverage as we approach the one-year anniversary of the Wall Street stalwart’s demise. The New York Times, CNN, Reuters, Forbes, GuardianBBC and Times Online, have all chimed in, just to name a few.

But since we at peHUB mostly care about private equity, we wanted to provide a “Where are they now” update on the fate of the buyout businesses affected by the collapses of Lehman, Merrill Lynch, AIG and, of course, Bear Stearns.

Starting with Lehman. Here’s some background on the firm’s merchant banking operations, via Buyouts:

The 35-investment professional merchant banking group, established in 1986, has raised and managed at least four institutional funds and several employee investment vehicles with total committed capital of more than $8 billion. Lehman Brothers Merchant Banking Partners IIV LP closed in 2007 at $3.3 billion.

Now: That business was purchased by its management, including Charles Ayres and Daniel James, and today it’s rebranded as Trilantic Capital Partners. The firm has been relatively quiet since the spin-out. Luxembourg-based investment company Reinet Investments also purchased part of the business.

Meanwhile, Lehman Brothers’ asset management business, Neuberger Berman, completed an employee-backed buyout. That business includes a number of alternative asset management business, as well as NB Private Equity Partners, a publicly traded closed-end investment company which invests in private equity funds managed, funds of funds, and direct private equity investments.

Finally, Lehman Brothers Venture Capital is now an independent entity known as Tenaya Capital.

Moving on to AIG’s merchant banking outfit:

AIG Investments as of June 30 had raised about $20.6 billion for 46 direct investment funds focused on the United States, Europe, Asia and emerging markets. AIG also holds a roughly 7 percent stake in Blackstone Group, valued at $700 million, that could be sold to raise cash.

Now: As the behemoth continues to slowly sell itself in pieces, the firm this week reached an agreement to sell AIG Investments to Hong Kong tycoon Richard Li, through his investment vehicle, Pacific Century Group, for $300 million. The auction for this business, which manages assets in private equity, hedge fund of funds, equities and fixed income, dragged on for months, with new bidders coming and going on a near-weekly basis, according to reports.

Update: No filing has been made to regarding AIG unloading that stake, so it appears that sale has not occurred. The company has solidified its relationship with Blackstone by using its investment banking arm as its advisor on a number of high-profile divestitures.

When Banc of America and Merrill Lynch were forced into a shotgun wedding, so were their private equity operations.

Banc of America Capital Investors manages some $2 billion of capital for the bank, invests in growth financings, buyouts, acquisitions and recapitalizations. The firm is currently managing its sixth fund. Merrill Lynch Global Private Equity’s operations consist of a staff of 70 which looks to make control-style investments of between $250 million and $750 million.

Now: The merged business is called BAML Capital Partners.

Lastly there’s Bear Stearns. The firm collapsed months earlier than the others, and its merchant banking business, Bear Stearns Merchant Banking, managed to escape unscathed.

Now: The firm became independent and renamed itself Irving Place Capital Partners. The firm is investing its third fund, a $2.7 billion vehicle closed in 2006.