Former Lehman FoF in market for $1B

The former Lehman Brothers Private Equity Partners is returning to the market this month in hopes of raising $1 billion for a new fund of funds, according to a source familiar with the effort.

Lehman Brothers Private Equity Partners, which changed its name to NB Private Equity Partners Ltd. (NBPE) on March 27, was acquired by a group that included members of management and Neuberger Berman. The acquisition of the unit, along with the fixed income, hedge fund and other alternative asset businesses of bankrupt investment bank Lehman Brothers, was expected to officially close at the end of April.

NBPE has kept the Lehman investment team intact and has more than $50 million in excess of unfunded commitments, according to a March 13 investor update.

Peter Von Lehe, managing director and a member of the fund of funds investment committee, declined to comment on fund-raising, citing public disclosure restrictions.

As long as the current market conditions persist, we don’t anticipate making any commitments.

Peter Von Lehe

As for NBPE’s existing fund, it hasn’t made a new pledge since July 2008 and it has no immediate plans to invest. “As long as the current market conditions persist, we don’t anticipate making any commitments,” Von Lehe said. “It’s most important for us to maintain a conservative capital structure. Right now, it’s hard for us to see more attractive investment opportunities for NBPE than buying back its own shares at these price levels.”

NBPE’s business includes primary commitments (80%), as well as secondary and direct co-investments (20%).

All told, NBPE currently has about $11 billion worth of commitments under management, according to the investor update, with pledges coming from more than 150 institutional investors. Among its known limited partners are the Indiana Public Employees’ Retirement Fund and the State of New Jersey Division of Investment. The most recent completed fund of funds is Lehman Crossroads XVIII, a vintage 2006 $1.5 billion pool.

The overall financials of the operation appear solid. According to the investor update, the unit’s own private equity exposure is $621 million, a figure that reflects the $445.4 million estimated value of its private equity investments and unfunded commitments of $175.6 million. —Michael Baron