Lehman Bros locked in new equity talks
Lehman Brothers, the troubled Wall Street investment bank, was holding intensive talks this weekend over a much-needed injection of billions of dollars in new equity capital.
Korea Development Bank (KDB), the South Korean government-backed institution, which last week appeared to have lost its appetite for Lehman, is thought to have returned to the table to discuss an investment of up to $6bn (£3.3bn).
KDB was warned off investing by Korea’s top financial regulator last week, but is now taking advice from boutique investment bank Perella Weinberg on new talks.
Lehman, led by CEO and chairman Richard Fuld, is also understood to have identified alternative investors, including Chinese brokerage Citic Securities. And the bank is talking to a number of Middle Eastern sovereign funds. Any deal with KDB would likely involve the Korean fund taking take a minority stake in Lehman, while an agreement with Citic or a Middle Eastern institution would see the company sell around 10 per cent of itself to each investor, in tandem with an equity-raising on the open market.
Lehman wants the negotiations wrapped-up before mid-September, when it reports it quarterly earnings – highlighting how pressing the company’s need for capital really is.
A less attractive alternative open to the Lehman board is the sale of its asset management arm, including fund management business Neuberger Berman.
