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Lehman Brothers Private Equity Partners sees NAV per share drop ten per cent

Lehman Brothers Private Equity Partners, a closed-end private equity fund of funds investment company, has announced that its unaudited net asset value per share has fallen by more than

Lehman Brothers Private Equity Partners, a closed-end private equity fund of funds investment company, has announced that its unaudited net asset value per share has fallen by more than ten per cent in January following a revaluation of its current assets.

During January, the fund’s investment manager, the NB Alternatives group (formerly the private fund investments group at Lehman Brothers), says it undertook an extensive effort to contact fund sponsors and obtain the latest information regarding preliminary year end valuations.

Given the sharp decline in asset valuations during the fourth quarter of 2008, Lehman Brothers Private Equity Partners believed this proactive approach was the prudent course of action in order to maintain industry-leading valuation processes and provide the most accurate value of the private equity portfolio.
 
Based on preliminary valuation information collected up to 10 February, LBPE’s unaudited NAV per share was USD8.40 at 31 January 2009 compared to the unaudited 31 December 2008 NAV per share of USD9.41, which was based on information obtained through 12 January 2009.

The most significant portion of the decrease (approximately USD1.02) was related to new valuation estimates for fund investments and co-investments at 31 December 2008 based on information that was collected in January.
 
During January, LBPE’s portfolio value decreased as a result of negative foreign exchange adjustments and depreciation in the unrealised value of publicly traded equity securities and credit related fund investments.

However, the net effect of share repurchases through the company’s liquidity enhancement agreement contributed approximately USD0.08 to LBPE’s net asset value per share during January. A total of 723,829 shares were repurchased during the month at an average price per share of approximately USD2.60.
 
Given the volatility of private equity returns during the fourth quarter of 2008 and the initial implementation of FAS 157 by many underlying sponsors for December 2008, the audit process for LBPE’s year end financial statements has been extended to April in order to incorporate additional audited valuation information from underlying fund sponsors.

Once the audit is complete, LBPE will issue an annual report and audited financial statements for the year ending 31 December. The audited financial statements will include the additional year-end 2008 information received in January. In the interim period, LBPE will continue to update and report its unaudited NAV estimate using valuation estimates received from fund sponsors on a preliminary basis.
 

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