UK - Investment bank Lehman Brothers is to take a minority stake in London based BlueBay Asset Management's as part of its initial public offering (IPO).
Lehmans have signed an agreement with London-based specialist fixed income asset manager and issue sponsor Credit Suisse to acquire a 4.99% holding stake at the offer price. It has also agreed not to build up any position over 9.99% without approval from Blue Bay's board.
This forms part of BlueBay's IPO which values the firm at 250-300p per share, with a total £524m market capitalisation at a midpoint 275p price. The issue is expected to be priced around 17 November.
The offer comprises of 63m existing shares. Barclays Bank is selling its entire stake of up to 30m shares, while Shinsei Bank will offer just under half of its shareholding up to 13m shares. Shinsei will also provide an additional 7mn shares as an over-allotment.
The two founding shareholders of BlueBay, CEO Hugh Willis and CIO Mark Poole, will each offer 10m shares to the post-IPO free float. Both will keep around 12% of shares each, while other employees will hold 33% of shares following the offer.
The IPO is not aimed at raising new cash, BlueBay account director Tim Williamson said. The IPO and exits of Barclays and Shinsei Bank were agreed at BlueBay's founding five years ago.
As part of the offer, Lehman Brothers agreed to a one-year post-IPO lock-up and standstill provisions and after on year, the investment bank agreed not to build any position over 9.99% without the approval from BlueBay's board of directors.
Lehman Brothers chief executive officer of Europe and Asia, Jeremy Isaacs said: "We are very pleased to have the opportunity to invest in BlueBay. This investment is in line with our strategy of making minority investments in leading alternative asset managers." Willis welcomed Lehman Brothers as shareholders.
According to IPE's Top 400 European Asset Manager table published in June 2006, BlueBay had assets of E3,900, of which E2,340 was for European institutional clients. Fixed income made up 100% of assets managed.
This comes amid keen interest from investment banks in hedge funds and follows several moves by investment banks over the past few weeks. MorganStanley recently bought US asset manager FrontPoint Partners as well as stakes in New York-based Avenue Capital and London-based Lansdowne Partners. And in October Merrill Lynch took a minority stake in US alternative investment manager DiMaio Ahmad Capital.