Lehman Gets Bids From Bain, Clayton for Asset-Management Unit

By Jason Kelly and Jonathan Keehner

Sept. 13 (Bloomberg) -- Lehman Brothers Holdings Inc. received bids for its asset-management unit from private- equity firms including Bain Capital LLC and Clayton Dubilier & Rice Inc., said people familiar with the situation.

The bids value the unit, which includes the Neuberger Berman fund business, private-equity funds and a brokerage firm serving wealthy individuals, at about $5 billion, said the people, who asked not to be named because the auction is private. KKR & Co. LP, which was weighing an offer, hadn't made a bid by the 5 p.m. deadline, the buyout firm told people involved in the process.

Lehman said Sept. 10 it would sell 55 percent of the investment unit, part of Chief Executive Officer Richard Fuld's plan to keep the 158-year-old firm independent. After its shares dropped 53 percent in the next two days, Fuld, 62, began talks with companies including Bank of America Corp. to sell all of Lehman, potentially derailing the investment-management auction.

``It's still going to be a premier property,'' said Eric Weber, a managing director of Freeman & Co., a New York-based financial-services consulting firm. ``Three years from now, you can take it public, if you can get your hands on it.''

Hellman & Friedman LLC, the San Francisco-based buyout firm started by Warren Hellman, may also have submitted a bid, according to the people. Representatives for Lehman and the private-equity firms declined to comment.

Revenue of $2.3 Billion

The buyout companies are angling to own a business with assets of $273 billion headed by former Goldman Sachs Group Inc. banker George Walker, 39. The New York-based firm proceeded with the auction because the private-equity firms continued to express interest in a deal, according to the people. While Lehman aimed to complete the sale by late next month, the process may be disrupted by a takeover of the company, perhaps as soon as this weekend.

The private-equity firms may get the investment business at a discount. Lehman's asset-management unit earned $361 million on $2.3 billion of revenue this year through August, according to a Sanford Bernstein research note at that time. The report valued the unit at $7 billion, including stakes in hedge-funds not included in the sale.

Lehman announced on Sept. 10 a $3.9 billion loss, the biggest in its history, after $5.6 billion of writedowns on real-estate loans and mortgages. The stock has fallen more than 94 percent this year and is valued below $3 billion, less than St. Petersburg, Florida-based Raymond James Financial Inc., the largest regional brokerage firm.

Private-equity firms including Blackstone Group LP and Carlyle Group had weighed bids for the investment unit and opted to stay out of the auction, according to people familiar with the process.

To contact the reporters on this story: Jason Kelly in New York at jkelly14@bloomberg.net; Jonathan Keehner in New York at jkeehner@bloomberg.net