Lehman Brothers Holdings Inc. today agreed to sell its asset management division to private equity firms Bain Capital Partners and Hellman & Friedman for $2.15 billion in cash, according to a Lehman news release.
The transaction will include Neuberger Berman, which comprises the bulk of Lehmans asset management business, as well as the fixed-income business and certain alternative asset management businesses of Lehmans investment management division, according to the release. Lehmans major direct private equity business and certain hedge funds are not included in the deal.
The divisions that are being sold had $230 billion in assets under management as of Aug. 31. They will form a new company, based in New York, called Neuberger Investment Management.
Bain Capital and Hellman & Friedman will be equal partners in the new company, while portfolio managers and management will also own a significant stake and will increase their ownership over time through an ongoing, equity-based compensation program, according to the release.
George Walker, global head of investment management at Lehman Brothers, will be CEO of the new firm, while Joe Amato, global head of asset management, will continue to lead Neuberger Berman.
A source familiar with the deal said staff turnover at the asset management level isnt likely. One of the keys to the deal was that senior portfolio managers will be on board with the deal, said the source, who asked not to be identified.
The deal is expected to close in early 2009 and is subject to certain conditions, including approval of U.S. Bankruptcy Court, since Lehman Brothers Holdings is under Chapter 11 bankruptcy protection, according to the release.
Randall Whitestone, a spokesman for Lehman; Alex Stanton, a Bain spokesman, and Pen Pendleton, a spokesman for Hellman & Friedman, all declined to comment beyond the news release. Mr. Walker was not immediately available for comment.