Lehman Brothers collected about $1.2 billion in distributions from its GP and LP stakes in private equity and hedge funds in 2012, according to a filing by the bankruptcy estate this week.
The bank, which filed the largest-ever bankruptcy in US history in 2008, continues to carry a collection of fund commitments to private equity vehicles on its balance sheet. Specifics of its holdings were not disclosed in the filing, and a Lehman spokesperson declined to provide details.
Several secondaries market sources have told Private Equity International in past interviews that at one time, Lehman had a pool of LP private equity stakes valued at almost $1 billion, which had been picked through by potential buyers. Lehman has sold private equity LP stakes opportunistically, but has not completed a large portfolio trade, according to a person with knowledge of the bank.
LP distributions in 2012 contributed to the total inflows into the Private Equity/Principal Investments group of about $4 billion, offset by $39 million in operating expenses, according to the filing. The total also includes the receipt of $442 million from two dividends and the sale of part of the bank’s stake in CVC portfolio company Formula One.
The private equity and principal investment unit, for the year through 31 March, 2013, has collected $733 million, including $403 million in distributions from GP and LP stakes in private equity and hedge funds, the filing said.
Lehman estimates it will collect another $1 billion this year and reach a total of $4 billion by 2015, the filing said.
Like other large investment banks, Lehman at one time supported in-house private equity shops that have spun out over the years. Trilantic Capital Partners, which spun out of Lehman Brothers Merchant Banking in 2009, started its life with about $1.7 billion of dry powder in what it called its Trilantic Capital Partners Fund IV. The firm has been in the market since last year raising what it’s calling its fifth fund on $2 billion. Trilantic had raised about $1.9 billion for the fund as of early July, according to a filing with the US Securities and Exchange Commission.
Lehman held on to its LP stakes of about $230 million of commitments in Fund III and IV.
The bank also spun out its venture capital group into a new firm called Tenaya Capital, and has been selling its stake in asset manager Neuberger Berman. A Lehman management group won a bankruptcy auction for the banks’ investment management division, including Neuberger Berman, in late 2008, beating a bid from Bain Capital and Hellman & Friedman.