Lehman Raises $3B for LBO Debt Fund

Lehman Brothers announced Monday it had raised enough money to create a $3 billion fund to buy leveraged buyout loans at a discount from lenders. The fund rasied about $670 million from investors, including $130 million from Lehman employees, and will increase the investment amount by borrowing equity. The Lehman Brothers Loan Opportunity Fund will allow Lehman and its customers to take advantage of "dislocations in the credit markets," said Michael J. Odrich, managing director and global head of private equity for Lehman. As a result of the credit crunch, banks have about $300 billion in loans sitting on their books which they have not been able to sell. Lehman joins companies like Oaktree Capital and Blackrock who have targeted banks looking to unload debt. Shares of Lehman closed 3.9% higher to $62.76 on Monday.

Sources: MarketWatch, Bloomberg
Commentary: Global Rescue Fund Seeks Participants - WSJ • Three Reasons To Refrain From Buying Investment Banks
Stocks to watch: LEH, BLK. Competitors: GS, MER, BAC. ETFs: IAI, KCE
Earnings call transcript: Lehman Brothers F3Q07 (Qtr End 8/31/07)

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