The private equity arm of collapsed investment firm Lehman Brothers Holdings Inc. (LEHMQ.PK) has reached a deal with its parent to spin out into an independent company, the Wall Street Journal reported Thursday, citing two people familiar with the matter.
According to the report in the Wall Street Journal, or WSJ, the deal involves receiving new investment from luxury-goods billionaire Johann Rupert, while Lehman will retain a substantial interest in the private equity group, which is called Lehman Brothers Merchant Banking. Rupert's Luxembourg-listed investment vehicle, Reinet Investments SCA, will assume $250 million in unfounded commitments to the fund.
Lehman Brothers Merchant Banking, made up of two private equity funds, has $4.5 billion under management and holds stakes in more than a dozen portfolio companies, the report noted. One of the funds is to be sold to the managers overseeing the unit.
The report noted that although several private-equity firms including Carlyle Group and Blackstone Group LP expressed an interest in buying the unit, Lehman decided to retain a substantial stake and spin off the rest to management.
Under the terms of the deal, Lehman will spin out its most recent fund, a $3.3 billion vehicle raised in 2007. The fund will be owned by the firm's current management led by chief Charlie Ayers. Meanwhile, a vehicle containing $1.2 billion in existing investments, which has performed well, will be retained by Lehman's bankruptcy estate, the report said.
Lehman will reportedly retain about $230 million of investments across both the vehicles as a limited partner. These holdings will include SRAM Corp, a Chicago-based maker of high-end bicycle components, Angelica Corp, a Missouri-based provider of hospital linens, and Talgo, a Spanish railcar manufacturer.
The WSJ report said that Lehman has offered limited partners that invested in the $3.3 billion fund the option to reduce unfunded commitments to the by 25%. Investors in the funds include the Pennsylvania Public School Employees' Retirement System and the New York City Retirement System. The report also noted that Lehman estate is currently running auctions for two other large Lehman private investment units. These include an $800 million venture capital arm and a $10 billion real-estate private equity group.
In December, Lehman agreed to retain a 49% stake in Neuberger Berman investment-management and sell the balance to the firm's management.
Lehman filed for bankruptcy protection under Chapter 11 in September after the company was unable to find a suitable buyer for itself, and subsequently announced a sale of major operations to parties including U.K.-based bank Barclays plc (BCS, BARC.L) and Japanese brokerage firm Nomura Holdings Inc. (NMR). The company listed $613 billion in liabilities and $639 billion in assets in its bankruptcy petition.
LEHMQ.PK closed Thursday's regular trading at $0.051, down $0.011 or 17.74% on a volume of 10.96 million shares.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.