Lehman Brothers this afternoon announced that it is selling its Investment Management division to Bain Capital and Hellman & Friedman for $2.15 billion. The deal includes Neuberger Berman, the fixed income unit and all non-direct alternative investment activities. What that leaves out is direct alternatives, which includes Lehman Brothers Merchant Banking (buyouts), Lehman Brothers Venture Capital and Lehman Brothers Real Estate. As of this moment, it is not clear what will become of the direct businesses. Assuming a bankruptcy judge approves the larger sale to Bain and H&F, the most likely scenario would be that each group would spin out into independent entities. It also is possible that the three could stick together as an independent alternatives house, which could be attractive due to certain shared services. In either case, the groups would have to decide what to do about existing funds, which were raised with large minority nuts from Lehman that will no longer be honored. They may just decrease the fund sizes, keep them steady with pro rata increases from third-party investors or cut off the funds and raise new ones. It’s also important to note that there is a third scenario, whereby the three groups somehow get reabsorbed by the Investment Management unit. Not sure how that would work, but I’ve been told the situation is fluid enough that it should not be discounted. The Lehman alternatives group had been run by
2 min read · 29 September 2008
2 min read · 29 September 2008
Remember when the bailout bill was just three pages long? Well now it's a 110-page giant, as is called the Emergency Economic Stabalization Act of 2008 (can't wait for the Emergency Economic Stabalization Act of 2009). You can download a draft of the bill in .PDF format here: bailoutbill. Please note that the final language may change between now and tomorrow's Congressional votes. Happy reading...
1 min read · 29 September 2008
Lehman still holds shares in antibody developer
1 min read · 29 September 2008
Updated Before I get into this, three quick caveats: (1) I just left our Seattle Shindig, after consuming a plethora of Red Stripes; (2) I'm sitting at the airport awaiting a red-eye back to Boston; and (3) I've slept fewer than five of the past 48 hours. Oh, and I'm officially off 'till Monday. Moving on... Private equity firms have done hundreds of lousy deals over the deals, including such notable duds as Refco and Atkins Nutritionals. But it would be hard to find a single one worse than TPG Capital leading a $7 billion capital infusion earlier this year for Washington Mutual, which has just agreed was forced to sell itself for scrap to JPMorgan. TPG and its equity co-investors are being completely wiped out, less than five months after first making the investment. This is a real "bloom coming off the rose" moment for TPG Capital, which was viewed by many as the world's savviest private equity firm. There were immediate concerns when TPG originally announced the deal, particularly due
2 min read · 26 September 2008
If you thought Wall Street has acted with brazen stupidity over the past few years, you apparently ain't seen nothing yet. CNBC is reporting that certain Wall Street firms are pitching a new derivatives-based product that would effectively let hedge funds skirt the ban on short-selling of financial stocks. Among the culprits is Citi: An official there who spoke on condition on anonymity said the technique is still in the discussion stages, adding that if it is rolled out, it will be used purely for hedging purposes. Hedge funds will not be able to use the technique to create a "net short" position. Rather, the technique will be used to hedge against potential losses from going long on a financial stock on the banned list. Are you kidding me? Wall Street pushes for this ban in order to protect itself, and now is working on a scheme that could easily circumvent those very protections. And for what end? To help out the short-selling hedgies that many bank executives think caused their problems in the first place? Most Americans don't understand
2 min read · 25 September 2008
1 min read · 25 September 2008
* A nation of morons, run by idiots. * The Fed relaxed rules governing PE ownership in banks, but it may be one of those solutions that doesn't make anyone happy. Banks can't get the amount of capital they want, PE firms can't get the control they want and critics don't like the government having budged even a few percentage points. * The FBI reportedly has opened investigations into possible fraud at Freddie Mac, Fannie Fae, AIG and Lehman Brothers. * Roger Ehernberg has some questions about Goldman and Morgan Stanley's transition into bank holding companies. Namely: "First, are they really going to take in core deposits and run branch networks, and if so, is the FDIC on the hook if the banking side of the house blows up?" * Dear John Thain has some ideas for a new regulatory structure. * Has a third Google founder emerged?
1 min read · 24 September 2008
2 min read · 23 September 2008
This Friday's presidential debate is about foreign policy, but it is almost certain that economic policy will also be discussed. Were I moderator Jim Lehrer, I'd ask the following question first: Who would be three of your top choices for Treasury Secretary? Hank Paulson fought hard for his plan today, and passage of anything similar would arguably make him the nation's most consequential financial figure. More an economic czar than a Treasury secretary. He might be around to spend the $700 billion, but it's unlikely that he'd be able to unload much of it before the next administration takes hold. That job will fall to someone else, and his/her identity will arguablybe more important than raising or cutting taxes for certain brackets. So Senators, who do you want? Obama suggested on 60 Minutes that he might be open to keeping Paulson on board, but wasn't pressed for why. McCain, to my knowledge, has not commented on it (although he did suggest
1 min read · 23 September 2008
