Private equity firms Bain, Hellman buy Lehman investment unit for $2.15 billion
01 October 2008
After bankruptcy, come the sell-offs. Following on the sale of its European and Middle East assets to Japanese securities firm Nomura See: Nomura to buy Lehman's banking, equities units in Europe, Middle East and its North American operations to British bank Barclays, Lehman Brothers on Monday agreed to sell its investment management unit to Bain Capital and Hellman & Friedman for $2.15 billion, about half the initial bid. Barclays to pick select parts of Lehman for $1.75 billion
The transaction includes Lehman's Neuberger Berman mutual fund division, which oversees about $130 billion, as well as part of a private-equity group that invests in leveraged buyouts and real estate, the companies said in a statement.
As part of the deal with Bain and Hellman& Friedman, a new independent investment management company named Neuberger Investment Management will be created, a release said. Neuberger Berman will be the largest operating unit and it also will include the fixed income and certain alternative asset management businesses of Lehman's investment management division, the release said.
Private-equity firms were the only bidders in a rushed auction of the unit after Lehman went bust. They were attracted by a business with $230 billion in customer assets and a steady cash flow that would have fetched more if not sold under duress.
Boston-based Bain, and Hellman & Friedman of San Francisco paid less than they initially offered separately earlier this month before teaming up, though the transaction doesn't cover all parts of the investment unit that were put up for sale. They will be equal partners, while fund managers and executives will also own a slice of the new firm.
Roy Neuberger and Robert Berman founded the firm that bears their names in 1939 to serve wealthy clients. During the 1950s, it was among the first firms to offer customers mutual funds that didn't charge transaction fees. Neuberger, now 105, retired before the 1987 stock market crash. The fund unit oversees $130 billion.
