Lehman Brothers has been the hot topic the past several months after the fall of Bear and especially within the past recent weeks. Investor speculations drove the stock price of Lehman down. Bear Stearns was the first to fall and there are many more to come. With the fall of Bear, there are going to be many ripple effects. With all the fundings and back office support to many businesses provided by these large investment houses, the worst have yet to come.
Lehman reported it’s biggest loss in over 150 years. The company posted a $3.9 billion 3rd Quarter loss on $5.6 billion write-downs. The stock which was trading a high as $67.73 as the past 52 weeks opened today $4.47. Lehman has also announced that it wants to sell a large majority stake - 55% of its investment-management unit which includes the Neuberger Berman asset-management business. This private equity side of the business is worth about $30 billion and included in this business are Venture-Capital investments, Lehman’s Merchant Banking and Infrastructure investment vehicles Real Estate, and Credit-related investments. Lehman wants to sell off 55% of this stake leaving them with only 45% of the future returns from their private equity deals. There is a lot of pressure on Lehman to raise capital to stay float. In this market, there doesn't seem much relief in sight.
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