Deal includes Neuberger Berman, fixed-income and alternative-asset groups. Lehman Brothers plans to sell Neuberger Berman to a pair of private-equity firms. Boston-based Bain Capital Partners and San Francisco-based Hellman & Friedman agreed to pay $2.15 billion in for Neuberger Berman along with the fixed-income and alternatives groups within Lehman's Investment Management (IM) division.

The result will be a new firm called Neuberger Investment Management owned by Bain Capital and Hellman & Friedman with an unspecified degree of equity participation by its management and senior portfolio team members. It will provide separately managed accounts, mutual funds, fixed-income and alternative investments to high-net-worth and institutional clients.

Interesting times

"I can't think of two better partners than Bain Capital and Hellman & Friedman, with proven track records of creating value in financial services, and asset management in particular," says George Walker, head of investment management for Lehman Brothers. "Our portfolio management and client teams are extremely enthusiastic about this next chapter in our history."

Walker is slated to become CEO of Neuberger Investment Management (NIM), which will be headquartered in New York. Neuberger Berman head Joe Amato will remain in charge of a new NIM business unit bearing that name.

"This is a special firm," says Hellman & Friedman managing director Allen Thorpe. "Each of its businesses -- Neuberger Berman equity as well as the fixe- income, quantitative and private-funds-investment groups -- has a strong individual performance record. We have also been impressed by their proven ability to work together through first-rate client professionals to design and implement comprehensive solutions for large, sophisticated clients." The former parts of Lehman that Capital and Hellman & Friedman plan to buy managed $230 billion in assets at the end of August 2008.

On 10 September 2008, Lehman said it planned to sell the asset-management, private-equity and wealth-management businesses of its IM division: business units that accounted for 55%, or around $150 billion, of Lehman IM's total $273 billion in assets under management on 31 August 2008. The businesses proposed for sale to Bain Capital and Hellman & Friedman account for about 84% of Lehman IM's end-of-August total.

Neuberger Berman had $63.7 billion under management when Lehman paid $2.6 billion for it in 2003.

When Lehman filed for bankruptcy protection on 15 September 2008, it excluded its Neuberger Berman subsidiary from the case, underlining that "fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and are not subject to the claims" made by the parent company's creditors.

On 16 September 2008, Barclays agreed to buy Lehman's investment-banking, brokerage and research operations for $250 million, and its New York headquarters and a couple of data centers in New Jersey for $1.45 billion. Barclays also agreed to provide $500 million and "a substantial interim credit facility" to "fund [Lehman's] ongoing operations." -FWR

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