Lehman’s $3.2bn fund needs sponsor

Executives at the private equity real estate group are searching for a new sponsor for the firm’s latest opportunity fund, which closed on $3.2bn days before the investment bank collapsed. The stake is worth a reportedly $780m.

Lehman Brothers Real Estate is searching for a new sponsor for its latest global property fund following the collapse of the investment bank, according to media reports.

As reportedly by PERE magazine last month, the private equity real estate group closed its latest opportunity fund in August on $3.2 billion – just days before the bank filed for bankruptcy on September 15.

The parent bank, Lehman Brothers Holdings’, traditionally invested up to 20 percent of its private equity and real estate closed-ended funds. According to Reuters, though, the nine-year fund, Lehman Brothers Real Estate Partners III, is now trying to find a new sponsor to take over the $780 million stake.

The global heads of LBRE, Mark Newman and Brett Bossung, along with the firm’s European head Gerald Parkes, are also reportedly trying to take control of the business, according to reports.

Keith Greengrove, a managing director at LBRE in Hong Kong, told Reuters the fund would be “migrating to new sponsorship,” adding: “It will be one of two options: our own management buyout or we’ll bring in a third party sponsor to replace Lehman Brothers.”

The fund would continue to operate normally despite the bankruptcy, Greengrove said, insisting there was no “issue about funding from Lehman.” One of the fund’s investments includes a stake in China-focused property fund management firm called ALAM. ALAM is hoping to raise $750 million for Chinese property over the next three years, according to Greengrove.