Lehman Brothers Real Estate not part of Neuberger deal

Lehman's private equity real estate arm is not part of the $2.1bn deal by Bain Capital and Hellman & Friedman to acquire the investment bank's prized asset management business, Neuberger Berman. Lehman's private equity funds of funds and secondaries units will be sold.

Bain Capital and Hellman & Friedman have agreed to acquire Lehman Brother’s asset management business Neuberger Berman, as well as some alternative asset management units.

The $2.15 billion (€1.5 billion) deal, however, will not include Lehman's private equity and real estate operations, Lehman Brothers Merchant Banking and Lehman Brothers Real Estate, nor its venture capital and certain hedge funds, according to a statement.

The transaction will create an independent investment management company comprising Neuberger Berman and some of Lehman's asset management and private funds units, including fixed income, private equity fund-of-funds and secondaries. The deal will also involve some of Lehman's co-investments and several startup private equity businesses, including infrastructure and mezzanine debt.

Michael Odrich, Lehman's head of private equity, and Tony Tutrone, head of the private funds investment group, will both join the new company, to be called Neuberger Investment Management.

The deal is expected to be complete by early 2009 and will be subject to bankruptcy court approval.

Lehman Brothers filed for bankruptcy on September 15 after the US government refused to bail out the struggling 158-year-old investment bank. Two days later, Barclays, the UK’s third biggest bank, agreed to purchase Lehman Brothers’ US investment banking and capital markets operations, as well as the bank's New York headquarters and two other office buildings, for around $1.75 billion.