Korean investor linked to Lehman Brothers

Date: Friday, August 22, 2008
Author: James Quinn, Wall Street Correspondent, Telegraph.co.uk

Lehman Brothers reportedly came close to striking a deal with a Korean sovereign wealth fund to inject almost $5bn into the troubled investment bank - only to see the talks collapse.

Lehman chairman and chief executive Dick Fuld is reported to have managed the talks with the wealth fund in recent weeks as part of the bank's continued discussions on raising more capital

However, American press reports say the talks with the investor may have came to nothing because Lehman was allegedly looking for more capital than the fund was willing to invest.

The reports did not name the fund, though the Korean Investment Corporation is known to have taken an active interest in investing in other troubled US financial institutions, and has a 4.7pc stake in Merrill Lynch. The talks are part of a wider move by Mr Fuld and the rest of his senior management team to raise more capital.

Other options include the sale of a stake in its investment management business, including Neuberger Berman. The division, which would include certain private equity and hedge fund businesses, is thought by analysts to have an overall value of $8bn to $10bn.

Another option for the bank is to offload some of its risky mortgage assets at a discounted rate.

Lehman shares reacted positively yesterday, closing up 66 cents at $13.73 in New York, despite a number of recent analyst notes which have suggested the bank will report significant writedowns in the third quarter to the end of August.

A spokesman for Lehman declined to comment.