Anyone familiar with Disney’s The Lion King understands the “circle of life.” If not, the idea can easily be explained using the example of bankrupt investment bank Lehman Brothers Holdings and the potential sale of its investment management business.
We’ll start the story five years ago this month. In October 2003, a then-healthy Lehman Brothers struck a deal to acquire
The deal broadened the private equity exposure of Lehman Brothers from a portfolio weighted heavily toward buyout funds to one that included domestic venture capital, which made up 60 percent of The Crossroad Group’s portfolio. Post-deal, the plan was for Lehman Brothers to strive to have a 50/50 split between buyout and venture funds. Since then, its fund-of-funds business has broadened further to include strategies such as distressed debt and turnaround investments.
The most recent fundraise completed by the Lehman Brothers fund-of-funds group was
In March of 2008, Lehman Brothers’s fund-of-funds group had also cobbled together $170 million for
Now, however, the predator has become the prey. Lehman Brothers, bankrupt and in need of capital, is selling off its investment management business, which includes the fund-of-funds business and a host of other assets, including crown jewel Neuberger Berman. The investment bank originally began mulling its options for an asset sale to raise some quick cash earlier this summer. Back then, the likely move was selling just a stake in Neuberger Berman.
But the deal came too late, and the company toppled because of bad debts on mortgage-backed securities. Buyout firms