Bloomberg reported that executives at Lehman are negotiating with at least one U.S. pension fund and an overseas investor, according to a person with knowledge of the matter, who declined to be identified because the discussions are confidential. The Wall Street Journal also reported that Lehman indicated to at least one U.S. pension fund that it would provide the fund with nonpublic information so that the fund could consider making a direct investment in the firm.
The WSJ noted that sovereign-wealth funds from Singapore, South Korea and Kuwait are among those that recently have bought preferred shares or other direct offerings from Merrill, Citigroup Inc., Morgan Stanley and UBS AG (see Wall Street Shores Up Finances With Overseas Capital ). Lehman has had talks with a major South Korean investor but made no announcement about a potential stake.
However, institutional investors haven’t been nearly as active in those as such government-run investment funds in making direct investments in U.S. financial companies trying to shore up their balance sheets.
On Sunday afternoon, the Wall Street Journal reported that Lehman Brothers Holdings Inc. is close to raising more than $5 billion of fresh capital from an array of investors – including the New Jersey Division of Investment, citing a person familiar with the matter. So far, Lehman has what the WSJ termed as “strong commitments” from the New Jersey Division of Investment, which manages the state’s $80 billion of pension funds.
The move comes as the firm is set to report a Q2 loss of more than $2 billion, this person said, according to the report. The firm was still pulling together final details of the capital raising, which could be announced Monday or Tuesday, according to the WSJ.