LEHMAN Brothers Holdings had reached an agreement in principle to sell its merchant banking business, made up of two private equity funds, to the management of the funds, a source said last week .
The business to be spun out would also take in new investment from South African billionaire Johann Rupert’s JSE-listed investment firm Reinet, the source said. Lehman’s bankruptcy estate would retain a substantial interest in the funds, the source said.
The proposed deal is subject to consent from investors in the funds, called limited partners.
A number of private equity firms including Blackstone Group and Lexington Partners had previously expressed interest in the assets, the source said.
The price for the proposed deal was unclear. The funds have about $4,5bn in assets, which includes money invested and money still to be drawn down from the limited partners.
Lehman Brothers filed for bankruptcy protection in mid-September after trying to finance too many risky assets with too little capital.
It has been selling various assets since then, including last month’s sale of its prized asset management unit, Neuberger Berman, to a team consisting of Neuberger’s management.
