Lehman Brothers planning $3bn fourth PE fund

The US bank’s private equity arm is reportedly looking to raise $3bn for its next fund, more than twice the size of its $1.2bn third vehicle.

Lehman Brothers Merchant Banking, the private equity arm of the US bank, is targeting a $3 billion (€2.35 billion) hard cap for its next private equity fund, according to a Reuters report.

The new vehicle would be substantially larger than its previous fund, Lehman Brothers Merchant Banking Partners III, which closed on $1.2 billion in July 2005. According to the Reuters article, fund III is now almost fully invested in 15 businesses.

Fundraising for fund IV is expected to begin this summer with a final closing in 2007.

An industry source confirmed the details of the Reuters story. Lehman Brothers Merchant Banking declined to comment.

Lehman Brothers Merchant Banking’s most recent European private equity investment from Fund III was the €425 million ($540 million) acquisition of the European seafood business of global food group H.J. Heinz Company. The vehicle also invested an undisclosed amount in Italian bottled drinks company Spumador in September 2005.

In the US, Lehman Brothers Merchant Banking backed the launch of New York-based music catalogue roll-up EverGreen Copyright Acquisitions for an undisclosed sum in January 2006.

Lehman Brothers Merchant Banking was established in 1986 and has over 20 investment professionals operating out of offices in New York and London.