Battered Lehman Brothers continued to take a pounding yesterday as the prospect of foreign investment in the firm further dimmed.
Shares in Lehman fell nearly 7 percent to $13.45 after South Korean regulators threw some cold water on the view that Korean Development Bank would make an investment in the firm.
“I think that KDB might have considered forming and leading a consortium to buy Lehman Brothers,” the chairman of the Financial Services Commission, Jun Kwang-woo said. “But it appears burdensome for a state-run institution to play a leading role” in buying the bank and taking risks that may be more than financial.
South Korea’s public caution about Lehman surfaced at the same time that new rumors hit Wall Street about CEO Dick Fuld’s ability to stay in control.
Reports surfaced yesterday that suggested Fuld was being pressured to fix Lehman quickly or step down. However, sources close to the firm told The Post that although Lehman’s sinking stock is obviously a great concern, confidence in Wall Street’s longest-tenured CEO hasn’t entirely eroded yet.
Lehman’s third quarter ends this week and it is expected to release its results as well as make an announcement about its strategy sometime in mid-September, when it is expected to rack up billions more in writedowns and record another big loss.
Fuld and his newly appointed lieutenant COO Bart McDade have continued efforts to raise capital as well as test the appetite for its investment-management unit anchored by Neuberger Berman.
Lehman has considered auctioning all or part of the well-regarded asset-management business in order to offset losses expected from a hoped-for sale of tens of billions in hard-to-value real estate assets.
At this point, it’s still too early to determine contenders for Lehman’s asset management business but names that have emerged include private-equity shop TPG, Kohlberg Kravis Roberts and Hellman & Friedman, according to sources involved in the transaction. Reps for the firms either declined to comment or did not return calls.
Others have expressed interest as well but expectations are that prospective buyers will begin to review marketing material for the asset-management arm in earnest after Labor Day.