JC Flowers, China Investment Company (CIC) and Bank of America are jointly pursuing the acquisition of Lehman Brothers, according to a report in the Financial Times.
The group is one of several that are considering making a bid for the troubled bank, the article said, including UK-based Barclays. A forced sale at a low price appears the most likely outcome for Lehman, according to the article.
Federal regulators are likely to stay on the sidelines and monitor the activities, but not offer the kind of protections that JP Morgan received in a deal to purchase Bear Stearns in mid-March, according to the article.
JC Flowers is a New York-based private equity firm, and the CIC is the Chinese sovereign wealth fund that has stakes in The Blackstone Group and JP Morgan. CIC has seen big unrealised losses this year on its investments in The Blackstone Group, which lost 42 percent of its paper value since last year, and JP Morgan, which is down 16 percent.
Lehman reported a third quarter net loss of $3.9 billion (€2.8 billion) and its stock price plummeted this week after shareholders and creditors rejected the company's efforts to survive as an independent company.
It announced yesterday a plan to sell off its balance-sheet commercial real estate as well as to sell a 55 percent stake in its asset management business, which includes its alternative investment fund groups Lehman Brothers Merchant Banking and Lehman Brothers Real Estate.