Lehman Brothers Private Equity Partners, a closed-ended private equity fund of funds investment company, has completed the initial public offering of its shares on Euronext Amsterdam, taki
Lehman Brothers Private Equity Partners, a closed-ended private equity fund of funds investment company, has completed the initial public offering of its shares on Euronext Amsterdam, taking the total capital raised to USD542.1m through a placing of 54.2 million shares following exercise of the over-allotment option.
The proceeds of the IPO will be committed to a diversified portfolio of private equity fund and direct private equity investments selected by Lehman Brothers’ private equity business. The company expects to acquire a portfolio of private equity assets diversified across asset class, geography, industry, vintage year and sponsor for an aggregate purchase price of some USD260.5m, and assume unfunded commitments totalling about USD354.1m.
Lehman Brothers has subscribed to USD145m of shares in the fund, which are subject to a three-year lock-up, and is bearing the underwriting, placement fees and other expenses associated with the IPO to ensure that 100 per cent of the gross proceeds are available for investment. Management fees are charged only on invested capital, not on cash or unfunded commitments.
As stabilising manager, Lehman Brothers International (Europe) exercised the over-allotment option in respect of 4,210,000 shares, bringing the proceeds from the offering from the original target of USD500m to USD542.1m.
The company has established a credit facility of USD250m with Bank of Scotland that is designed to support a prudent over-commitment strategy, with the aim of allowing the fund to maximise the amount of its capital invested in private equity and to minimise cash drag.
Lehman Brothers International was the sole global co-ordinator for the IPO and one of the joint bookrunners alongside Hoare Govett and UBS Investment Bank, with Banco Urquijo and Crèdit Andorrà as co-managers.
Since its establishment in 1987, Lehman Brothers’ private equity business has achieved an internal rate of return of 18.1 per cent, net of fees and expenses, on its primary private equity fund investments and co-investments.
‘We are delighted by investors’ response to the IPO,’ says Lehman Brothers Private Equity managing director Joe Malick. ‘We believe investors were attracted to our excellent long-term track record in private equity as well as our carefully-developed structure, including the absorption of listing costs by Lehman Brothers.
‘We have also been encouraged by our existing clients’ appetite to supplement their exposure to Lehman Brothers’ private equity investments by investing in the fund. Their feedback suggests that investment in liquid private equity products is critical to supporting a balanced exposure to this important asset class.’