Lehman missed out on $5 billion from Korea


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.

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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.

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