Lehman Brothers to offload FoF shares in secondary transactions

Lehman Brothers Private Equity Partners (LBPE) has agreed to help its parent company, failed US investment bank Lehman Brothers, sell its shares in the closed-end fund of funds in up to three marketed secondary transactions starting in mid-2010.

LBPE was listed on the Euronext Amsterdam index in July 2007, with Lehman Brothers purchasing approximately 14.5 million shares for $145 million during the IPO. The shares, which gave Lehman Brothers a 28 percent stake in the new firm, were then locked-up for three years in order to demonstrate Lehman’s long-term commitment to LBPE.

While Lehman had planned to hold those shares perpetually, it has been in the process of reducing its obligations to creditors and selling its private equity, venture capital and real estate funds since filing for bankruptcy in September. A Lehman management group won a bankruptcy auction in December for the bank’s investment management division, including Neuberger Berman.

LBPE will also soon be known as NB Private Equity Partners, reflecting the name of investment manager NB Alternatives Advisors following its sale to Neuberger Berman Group. The change is intended to symbolize the break from its parent company and avoid any confusion about its connection to Lehman Brothers, the firm said in a March 13 investor presentation.

Under a new agreement, NB Alternatives will assist Lehman in up to three marketed secondary offerings of shares for a period of 18 months following the end of the lock-up period on 10 July 2010. Peter Von Lehe, managing director of NB Alternatives, said the firm had received inquiries from the market regarding the Lehman stake in LBPE, and that the new agreement provides clarity on both the lock up and a clear path for how the Lehman estate can realise its investment in an orderly fashion after the lock up expires.

“It is up to the Lehman estate to decide whether and when to sell their interest after the expiration of the lock up,” Von Lehe said. “We have agreed to assist them so that the market knows there will be an orderly, rational disposition of the shares. Potential investors in marketed secondaries often want to meet with management and receive additional information about the investment opportunity, and that is what we will assist in doing.”