JOHANNESBURG, Jan 12 (Reuters) - An investment company controlled by South African billionaire Johann Rupert is in talks about the buy-out of Lehman Brothers Inc's merchant banking business.
Reinet Investments said it was in talks with the Lehman bankruptcy estate and investors in the funds managed by the merchant banking division. There was formal agreement but a further announcement would be made in due course.
A source familiar with the situation said on Thursday Lehman Brothers had reached an agreement in principle to sell its merchant banking business, made up of two private equity funds, to management of the funds.
The business to be spun out would also take in new investment from the Rupert family, the source said.
Reinet was created last year when the Rupert family-controlled luxury group Richemont was restructured and its stake in British American Tobacco spun off.
Lehman Brothers Holdings Inc filed for bankruptcy protection in mid-September after trying to finance too many risky assets with too little capital. It has been selling various assets since then.
The price for the proposed deal is unclear. The funds have about $4.5 billion in assets -- which includes money invested and money still to be drawn down from the limited partners.
Lehman's bankruptcy estate will retain a substantial interest in the funds, the source said.
The proposed deal is subject to consent from the investors in the funds, known as limited partners. A formal auction was run for the assets by Lazard on behalf of Alvarez & Marsal, Lehman's restructuring advisors, the source said.
A number of private equity firms including Blackstone Group and Lexington Partners Inc. had previously expressed interest in the assets, the source said.
The management from Lehman's merchant banking business leading the proposed deal are Charles Ayres and Daniel James, the source said.
Investors in the funds include the Pennsylvania Public School Employees' Retirement System, the New York City Retirement System and fund manager Caisse de depot et placement du Quebec, the source said.
Reinet shares are listed in Luxembourg and depositary receipts are listed in Johannesburg. The company owns a small stake in BAT and would have assets worth around 2 billion euros ($2.69 billion), Richemont said when it unveiled the group restructuring in August.
(Reporting by Rebecca Harrison; Editing by Rupert Winchester) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com) ($1=.7429 Euro) ($1=.7429 Euro) (rebecca.harrison@thomsonreuters.com; +27 11 775 3160; Reuters Messaging: rebecca.harrison.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Reinet Investments said it was in talks with the Lehman bankruptcy estate and investors in the funds managed by the merchant banking division. There was formal agreement but a further announcement would be made in due course.
A source familiar with the situation said on Thursday Lehman Brothers had reached an agreement in principle to sell its merchant banking business, made up of two private equity funds, to management of the funds.
The business to be spun out would also take in new investment from the Rupert family, the source said.
Reinet was created last year when the Rupert family-controlled luxury group Richemont was restructured and its stake in British American Tobacco spun off.
Lehman Brothers Holdings Inc filed for bankruptcy protection in mid-September after trying to finance too many risky assets with too little capital. It has been selling various assets since then.
The price for the proposed deal is unclear. The funds have about $4.5 billion in assets -- which includes money invested and money still to be drawn down from the limited partners.
Lehman's bankruptcy estate will retain a substantial interest in the funds, the source said.
The proposed deal is subject to consent from the investors in the funds, known as limited partners. A formal auction was run for the assets by Lazard on behalf of Alvarez & Marsal, Lehman's restructuring advisors, the source said.
A number of private equity firms including Blackstone Group and Lexington Partners Inc. had previously expressed interest in the assets, the source said.
The management from Lehman's merchant banking business leading the proposed deal are Charles Ayres and Daniel James, the source said.
Investors in the funds include the Pennsylvania Public School Employees' Retirement System, the New York City Retirement System and fund manager Caisse de depot et placement du Quebec, the source said.
Reinet shares are listed in Luxembourg and depositary receipts are listed in Johannesburg. The company owns a small stake in BAT and would have assets worth around 2 billion euros ($2.69 billion), Richemont said when it unveiled the group restructuring in August.
(Reporting by Rebecca Harrison; Editing by Rupert Winchester) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com) ($1=.7429 Euro) ($1=.7429 Euro) (rebecca.harrison@thomsonreuters.com; +27 11 775 3160; Reuters Messaging: rebecca.harrison.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
