Firms and Funds

All the way back in 1998, AIG invested $150 million for a 7% stake in Blackstone Group. The stake was supposed to be valued at $1.35 billion over an undisclosed period of time. At the time of Blackstone’s IPO last year, that stake grew to nearly $2 billion, according to an AP report. Separately, AIG agreed to commit around $1.2 billion in various Blackstone funds. The point was to formalize AIG's relationship with the fund via former AIG CEO Hank Greenberg.* Now Greenburg has been ousted at AIG (replaced by a buyout pro no less), and anyways, the insurer may need to liquidate that stake. Ironically, the same 1998 press release that announced AIG’s investments in Blackstone also announced a termination of a longstanding LP relationship, triggered by a different financial crisis. Blackstone lost its commitment from Nikki Securities of Japan thanks to the tough market in Tokyo in the late 90s.

NEW YORK (Reuters) – Bank of America Corp’s $50 billion acquisition of Merrill Lynch & Co Inc marks the end of a storied name in American finance, but also creates the nation’s biggest bank by far. The purchase would end the 94-year independence of Merrill, Wall Street’s third-largest bank, and pair it with a banking […]

Gary Bland is the State Investment Officer for New Mexico, which has committed approximately $50 million to a pair of Lehman Brothers private equity funds. peHUB: What’s your take on all this craziness? GB: The bullies are out there trying to eat everybody’s lunch. They’re trying to steal the lunch money too. So what do you think should happen? I think that it’s probably being worked on even as we speak. It’s one of those circumstances where nobody knows what to do. Every piece of news that comes out sounds bad, looks bad, is bad, the world’s coming to an end.

More details to follow…

A few unrelated Lehman Brothers notes: 1. There are currently 65 PE-backed companies in registration to go public, of which 10 list Lehman Brothers among their lead underwriters. This includes VC-backed companies like LogMeIn and EyeBlaster, and buyout-backed companies like Mcjunkin Red Man Holding Corp. and Vought Aircraft Holding Co. Changing IPO underwriters is more headache […]

Dealbreaker this morning reported that Berkshire Hathaway/Warren Buffet could be interested in backstopping AIG. Then I got an unfounded tip suggesting that AIG had hired a law firm to advise it on filing for Chapter 11. (Just in case of a freak accident, Equity Private has laid out a discussion of the possibilities) But at last, the truth. At around 1pm, Governor Patterson agreed to let

NEW YORK (Reuters) – Bank of America’s acquisition of Merrill Lynch creates the No. 1 underwriter of global debt and equity securities, bumping off JPMorgan from the top spot, according to Thomson Reuters data. Banc of America Securities and Merrill Lynch underwrote $45.6 billion in equity worldwide year to date, compared to $39.7 billion for […]

The big question for me right now is what will become of Lehman Brothers’ private equity unit, which has around $35 billion in assets under management. This includes buyout funds, venture capital funds, funds-of-funds and fund placement activities.  Lehman said in a press release last night that has resumed plans to sell off its investment […]

BANGALORE (Reuters) – Analysts on Monday said the failure of Lehman Brothers Holdings Inc (LEH.N) will cause a major reduction in credit market liquidity and raise concerns over substantial counterparty risk exposure that Lehman had, while forcing other brokers to mark down the value of their assets. “We expect the financial markets to be under […]

NEW YORK (Reuters) – As Lehman Brothers Holdings stared failure in the face on Sunday, anxiety intensified about the health of several other big U.S. financial institutions. “We will see other major financial firms fail,” former Federal Reserve Chairman Alan Greenspan said. “Indeed, we shouldn’t try to protect every single institution. The ordinary course of […]