Lehman Brothers Holdings has announced that its venture capital business, Lehman Brothers Venture Partners, has been sold to a group consisting of the current management team and funds
Lehman Brothers Holdings has announced that its venture capital business, Lehman Brothers Venture Partners, has been sold to a group consisting of the current management team and funds managed by HarbourVest Partners for an undisclosed amount.
Lehman Brothers Holdings selected the offer after a formal process to assess options for its venture capital arm, attracting significant interest for its positions in the funds and the group’s operations.
‘This creative transaction balances the needs of all parties, including the existing limited partners,’ says Jack McCarthy, Jr. (pictured), a managing director with professional services firm Alvarez & Marsal who is heading Lehman Brothers Holdings’ principal investing and private equity asset team.
Alvarez & Marsal has been overseeing the Lehman Brothers Estate and working to preserve and maximize value for creditors. Lazard acted as financial adviser to the estate in the sale process.
The estate will transfer both its general partner and limited partner stakes in the transaction, and receive both cash consideration and certain other performance-related payments tied to the ongoing success of the funds.
LBVP’s most recent fund, the USD365m Lehman Brothers Venture Partners V raised in 2007, is focused on mid- to late-stage investments in high-growth technology companies made in conjunction with other top-tier venture capital firms.
Thomas Banahan, former managing director and global head of venture capital for Lehman Brothers, will manage the new group alongside his four other partners, Ben Boyer, Stewart Gollmer, Brian Melton and Brian Paul.
‘Our objective from the beginning of this process was to protect the interests of our limited partners, portfolio companies and co-investors,’ Banahan said in a statement. ‘This transaction accomplishes that goal by ensuring that we retain the same management team that has built this business over the last decade, and we are delighted to move forward as an independent, standalone firm.’
Since its inception in 1995, Lehman Brothers Venture Partners has invested in more than 95 portfolio companies. As of the closing of the transaction, the firm has changed its name to Tenaya Capital and will have approximately USD750m under management and approximately 45 portfolio companies.
‘This transaction is a great opportunity for HarbourVest,’ says John Toomey, a managing director of the firm. ‘We are excited to become partners with the LBVP team and to help Tenaya Capital become an independent organization.’
HarbourVest Partners is an independent global alternative investment firm and an SEC-registered investment adviser. It provides programmes for institutional investors to invest in venture capital, buyout, mezzanine debt, distressed debt, and real estate.
