Private equity firms to buy Lehman's Neuberger

Bain Capital Partners and Hellman & Friedman, two of the nation's biggest buyout firms, will now control Lehman's operations in fixed-income and alternative asset management. The deal includes money management firm Neuberger Berman, a 69-year-old name on Wall Street that now manages more than $130 billion of investments.

Lehman has been scrambling to sell off healthy portions of the investment bank, whose bankruptcy filing on Sept. 15 was the biggest in U.S. history. The investment house sold its key North American businesses, including investment banking, to Britain's Barclays PLC for $1.7 billion in cash. Nomura, Japan's largest brokerage, bought Lehman's operations in Europe, the Middle East and Asia.

The purchase of Neuberger Berman and Lehman's other investment management businesses marks the last major unit to be sold off.

Lehman bought Neuberger in 2003 for $3.2 billion to expand its reach in wealth management. The entire investment management unit was valued at as much as $10 billion before the bankruptcy.

"We are excited and energized about what this means for our clients and our employees," said George Walker, the former head of investment management at Lehman, who will become CEO of the newly renamed Neuberger Investment Management. "Our portfolio management and client teams are extremely enthusiastic about this next chapter in our history."

Founded in 1939 by Roy Neuberger, the firm has specialized in managing money for wealthy clients. It is also considered to be a pioneer in making mutual funds more widely accessible.

Richard Fuld, Lehman's longtime chief executive, had pitched a plan to raise cash and save the company by selling a controlling stake in Neuberger Berman to private equity firms. Lehman filed for Chapter 11 after a deal to buy the unit could not be quickly put in place, and later efforts to sell the entire investment bank failed.

The transaction also includes Lehman's $35 billion private-equity business, which manages real estate and leveraged buyout funds. The sale doesn't include Lehman's stakes in hedge fund managers GLG Partners Inc. and Ospraie Management LLC.

The sale must be approved by a federal bankruptcy court.