Lehman’s $30bn PE and RE portfolio still up for grabs

As British bank Barclays snaps up Lehman’s core investment banking businesses, the fate of the bankrupt bank’s investment management division including its private equity and real estate portfolio has yet to be sealed.

Barclays, the UK’s third biggest bank, has agreed to purchase Lehman Brothers’ US investment banking and capital markets operations, as well as the broken banks’ New York headquarters and two other office buildings, for a consideration of around £1 billion (€1.25 billion; $1.75 billion).  

The deal, which includes Lehman’s fixed income, equities sales and research departments, does not account for the bank’s investment management division, which includes Lehman Brothers Real Estate and, according to its website, manages more than $30 billion-worth of private equity and real estate investments.

Lehman, the fourth largest investment bank in the US, filed for bankruptcy protection on Monday. The investment management division, a separate legal entity from the holding company which controls Lehman, was not a party in the bankruptcy filing. Lehman's highly-prized asset management unit, Neuberger Berman, was also excluded from the bankruptcy case.

The investment management division is reportedly in talks with a number of private equity suitors, including Bain Capital, Hellman & Friedman, Clayton Dubilier & Rice and Kohlberg Kravis Roberts.

CVC Capital, which has also been reported as a potential buyer, is in fact not involved, according to a source close to the situation.