Knowledge Partners


 Basiz Fund Service    Economic Laws Practice    Avalon Consulting  

 Spark Capital    Tatva Legal   

December 12, 2008

Status check on Lehman and AIG asset sales

WSJ.com's Deal Journal has an interesting post following up on the asset sales managed so far by Lehman and AIG.
It isn’t working out exactly as the government may have intended. Potential buyers are hoarding their cash, and the recessionary environment is hardly welcoming for fully valued bids on the assets of troubled companies.

As a result, as of Wednesday, Lehman has raised only $3.5 billion through asset sales, and AIG $254 million. The problem at the core of these asset sales is obvious: The only valuation that counts these days is the one that reads “dirt cheap.”

On Wednesday, Banque Nomura France, a unit of Japan’s Nomura Holdings, bought Lehman’s French investment-banking assets for €1. That’s right. For $1.30. That for a business that has equity capital of $43.6 million, according to Bloomberg estimates. Nomura previously snapped up Lehman’s European, Middle East and Asia operations, not including the French arm, for $225 million. Barclays bought the U.S. businesses–including real estate–for $1.75 billion. Lehman’s investment management businesses, including Neuberger Berman, were valued at $8 billion in June according to analysts, but were sold for no cash at all to Neuberger’s own management. In all, a firm valued at around $13 billion in June–which was already considered a depressed valuation–ended up fetching around $3.5 billion, according to one of its lawyers, plus that $1.30, of course.

(It's important to note that these firms have 5 years to complete the sales.)

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in