Lehman missed out on $5 billion from Korea

| 20 August 2008 07:28

Apparently, Lehman Brothers was looking to strike a deal with a Korean Sovereign Wealth Fund (SWF) for a whopping $5 billion, but the deal fell through — this according to the NY Post.

Lehman Brothers’ embattled Chief Executive Dick Fuld nearly struck a deal to raise almost $5 billion from South Korean wealth funds and institutions but the pact disintegrated, according to sources familiar with the matter.

It’s unclear why the deal fell apart earlier this month, although one source speculated that Lehman was aiming to raise more capital than the Korean investor was willing shell out at the time.

The precise terms of the deal could not be learned.

-NY Post, 20 Aug 2008

The Post doesn’t name names, but I have a sneaking suspicion that we are talking Korea Investment Corporation (KIC). KIC took a $2 billion preferred stock stake in Merrill and converted them into common shares just at the end of July, so it could be they are not looking to increase their exposure to U.S. financial institutions just yet.

Without Asian and Middle Eastern SWFs, where would Western banks be? In Lehman’s case, we are about to find out.

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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