Deal imminent for Lehman's asset management businesses
With Barclays acquiring the North American investment banking operation, either a strategic buyout or a management buyout of asset management is about to be announced.
The fate of Lehman Brothers Asset Management should be known by tomorrow and perhaps as early as today.
Senior executives at the firm are confident the hard assets of LehmanÆs asset management division and its US subsidiary Neuberger Berman, which total $273 billion, will either find a strategic buyer or be spun off in a management-led buyout.
Both LBAM and Neuberger continue to function and are not subject to the bankruptcy proceedings of the parent, Lehman Brothers Holdings Inc. The firm has pledged the unitsÆ research, investment and operations functions will continue.
The Asian component manages real-estate and private-equity transactions as part of global portfolios, and has recently established the capacity to manufacture Chinese equity products (under Frank Yao, former CIO at ChinaÆs Huaan Fund Management), and Indian infrastructure funds.
It has investment professionals in Tokyo, Hong Kong, Singapore and Sydney, and was just beginning to network with regional distributors for retail markets. In addition the firm has recently built a nine-strong investment team for Greater China equities, with research analysts in Shanghai and portfolio managers in Hong Kong.
The Asian operations are expected to remain combined with the global asset management business.
Whether the asset management group on its own can be as effective remains to be seen, particularly in Asia and Europe, where its activities are new û only two and four years old, respectively.
The firm prided itself on the ability to begin in asset management with a clean slate, which meant integrating with other parts of the firm û connections that are now going to be severed.
In an interview with AsianInvestor in May 2008, Chris Manning, head of the investment management division for Asia-Pacific, said the firm tries to share information and clients with the capital-market and investment-banking departments of the parent.
Asset management comprised one of four core businesses for Lehman, along with fixed-income capital markets, equity capital markets and investment banking. These other functions in North America will now be acquired by Barclays Capital; no buyer has been found for LehmanÆs international sell-side activities, including its prime brokerage.
Yesterday BarclaysÆ board of directors announced its agreement, subject to US regulatory approvals, to acquire LehmanÆs North American investment banking and capital market operations and supporting infrastructure. The acquired assetsÆ current estimated value is $72 billion with trading liabilities of $68 billion, which Barclays will buy for $250 million. The British bank is also acquiring LehmanÆs New York headquarters building and two data centres at close to their current market value, estimated at $1.5 billion. Barclays plans to raise up to $1 billion of additional equity to finance the purchases.
A Barclays spokesperson declined to comment on whether the bank was also in talks to acquire LehmanÆs asset management businesses. Barclays Group already boasts Barclays Global Investors and may not feel the need to take on yet more in asset management.
Barclays senior executives told analysts last night that they acquired the Lehman US brokerage and banking business because it complements Barclays Capital's existing franchise, which has traditionally been weak in the United States. On the other hand, with BGI, it is already among the world's top-five largest asset managers, as well as one of the world's largest wealth managers.
BarCap officials say they are not obliged to acquire any of Lehman's ex-North American operations or personnel, but would be looking to do so selectively. Again, BarCap executives pointed to areas such as cash equities, where Lehman's US desk is consistently profitable, and where BarCap is weak, and so the group would like to hire some of Lehman's cash equities traders in the UK and Europe. Again, this does not extend to asset management. Barclays walked away last weekend from a possible acquisition of Lehman Brothers' entire group.
Senior executives at the firm are confident the hard assets of LehmanÆs asset management division and its US subsidiary Neuberger Berman, which total $273 billion, will either find a strategic buyer or be spun off in a management-led buyout.
Both LBAM and Neuberger continue to function and are not subject to the bankruptcy proceedings of the parent, Lehman Brothers Holdings Inc. The firm has pledged the unitsÆ research, investment and operations functions will continue.
The Asian component manages real-estate and private-equity transactions as part of global portfolios, and has recently established the capacity to manufacture Chinese equity products (under Frank Yao, former CIO at ChinaÆs Huaan Fund Management), and Indian infrastructure funds.
It has investment professionals in Tokyo, Hong Kong, Singapore and Sydney, and was just beginning to network with regional distributors for retail markets. In addition the firm has recently built a nine-strong investment team for Greater China equities, with research analysts in Shanghai and portfolio managers in Hong Kong.
The Asian operations are expected to remain combined with the global asset management business.
Whether the asset management group on its own can be as effective remains to be seen, particularly in Asia and Europe, where its activities are new û only two and four years old, respectively.
The firm prided itself on the ability to begin in asset management with a clean slate, which meant integrating with other parts of the firm û connections that are now going to be severed.
In an interview with AsianInvestor in May 2008, Chris Manning, head of the investment management division for Asia-Pacific, said the firm tries to share information and clients with the capital-market and investment-banking departments of the parent.
Asset management comprised one of four core businesses for Lehman, along with fixed-income capital markets, equity capital markets and investment banking. These other functions in North America will now be acquired by Barclays Capital; no buyer has been found for LehmanÆs international sell-side activities, including its prime brokerage.
Yesterday BarclaysÆ board of directors announced its agreement, subject to US regulatory approvals, to acquire LehmanÆs North American investment banking and capital market operations and supporting infrastructure. The acquired assetsÆ current estimated value is $72 billion with trading liabilities of $68 billion, which Barclays will buy for $250 million. The British bank is also acquiring LehmanÆs New York headquarters building and two data centres at close to their current market value, estimated at $1.5 billion. Barclays plans to raise up to $1 billion of additional equity to finance the purchases.
A Barclays spokesperson declined to comment on whether the bank was also in talks to acquire LehmanÆs asset management businesses. Barclays Group already boasts Barclays Global Investors and may not feel the need to take on yet more in asset management.
Barclays senior executives told analysts last night that they acquired the Lehman US brokerage and banking business because it complements Barclays Capital's existing franchise, which has traditionally been weak in the United States. On the other hand, with BGI, it is already among the world's top-five largest asset managers, as well as one of the world's largest wealth managers.
BarCap officials say they are not obliged to acquire any of Lehman's ex-North American operations or personnel, but would be looking to do so selectively. Again, BarCap executives pointed to areas such as cash equities, where Lehman's US desk is consistently profitable, and where BarCap is weak, and so the group would like to hire some of Lehman's cash equities traders in the UK and Europe. Again, this does not extend to asset management. Barclays walked away last weekend from a possible acquisition of Lehman Brothers' entire group.
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