Bain Capital Partners and Hellman & Friedman have concluded negotiations to acquire Neuberger Berman, the 69-year-old asset management firm, and the fixed income and some other alterna
Bain Capital Partners and Hellman & Friedman have concluded negotiations to acquire Neuberger Berman, the 69-year-old asset management firm, and the fixed income and some other alternative asset management businesses of Lehman Brothers’ investment management division.
The acquisition is being made by the two private equity firms in partnership with portfolio managers, the management team and senior professionals at the businesses being acquired, which are valued under the cash transaction with the bankrupt Lehman Brothers Holdings at USD2.15bn.
Under the transaction, a new independent investment management company known as Neuberger Investment Management will be created comprising Neuberger Berman, the fixed income and alternative asset management businesses, which managed more than USD230bn in assets at the end of August.
Founded in 1939 by Roy Neuberger, Neuberger Berman has some 25 portfolio teams in its private asset management platform and offers separately managed accounts, mutual funds and advice to high net worth and institutional investors.
George Walker, global head of investment management for Lehman Brothers, will be chief executive of Neuberger Investment Management, and Joe Amato will continue to lead Neuberger Berman. The new company will offer a broad suite of investment management products, including high net worth, separately managed accounts, institutional, fixed income, mutual funds and alternative assets including private equity.
‘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,’ Walker says. ‘Our portfolio management and client teams are extremely enthusiastic about this next chapter in our history.’
Adds Amato: ‘The portfolio managers across equities, fixed income and alternatives are all energised by the opportunity to reinforce and enhance our already high standards of investment performance and client service combined with the opportunity to re-establish a direct ownership basis in the business.’
Allen Thorpe, a managing director at Hellman & Friedman, says: ‘This is a special firm. Each of its businesses 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.’
Bain Capital Partners and Hellman & Friedman are equal partners in the new company, while portfolio managers and management will also own a significant stake and will increase their ownership over time through an equity-based compensation program. The transaction is expected to be completed by early 2009 and is subject closing conditions, including approval from the bankruptcy court for Lehman Brothers Holdings.
The transaction includes the capabilities of Neuberger Berman, primarily focused on equities products and services and mutual funds for high net worth and institutional clients, Lehman Brothers Asset Management, with fixed income, commodities, and quantitative portfolio management, and Lehman’s private funds investment group which includes the hedge fund and private equity fund of funds businesses, secondary private equity and co-investment as well as start-up private equity businesses including infrastructure and mezzanine debt. Michael Odrich, head of private equity, and Tony Tutrone, head of the private funds investment group, will both join the new company.
The transaction does not include Lehman’s direct private equity businesses including merchant banking, real estate, venture capital and MLP, certain hedge funds, or, with minor exceptions, the limited partner investments of Lehman Brothers Holdings in the acquired funds. Nor does it include the minority stakes in hedge funds held by Lehman Brothers Holdings, for which the parent group continues to assess strategic alternatives.
In addition, the North and South American operations of Lehman Brothers Private Investment Management, an institutional and high net worth brokerage business, have been sold to Barclays Capital as part of its purchase of Lehman’s capital markets business.
Founded in 1984, Bain Capital manages various pools of capital including private equity, high-yield assets, mezzanine capital and public equity with more than USD82bn in assets under management, and has more than 300 professionals at its headquarters in Boston and offices in New York, London, Munich, Tokyo, Hong Kong, Mumbai and Shanghai.
Hellman & Friedman, which has offices in San Francisco, New York and London, has raised and managed more than USD16bn in capital since its establishment, also in 1984, and is currently investing its sixth partnership, Hellman & Friedman Capital Partners VI, with more than USD8bn in committed capital. Its financial services and asset management investments include Gartmore, Franklin Templeton Investments, Grosvenor Capital Management, Mondrian Investment Partners and the Nasdaq Stock Market.
