Lehman Preferred Series "J" Preferred (fka LEHJQ)

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Evercore Takes Stake in Trilantic Capital Partners Fund

http://online.wsj.com/article/SB10001424052748704337004575059740335801792.html?mod=WSJ_Deals_LEFTTopNews

By PETER LATTMAN
Evercore Partners Inc. has taken a stake in a fund managed by Trilantic Capital Partners, the former private-equity arm of Lehman Brothers Holdings Inc.

The deal, announced late Thursday, gives the firm an interest in Trilantic, a New York-based firm with $4.5 billion under management and stakes in more than a dozen portfolio companies, including Sram LLC, a Chicago-based bicycle components maker, and Angelica Corp., a Chesterfield, Missouri, hospital-linens provider.

Under terms of the agreement, Evercore will get a minority interest in Trilantic's current fund in exchange for Evercore restricted shares. Those shares, which vest at the end of 2014, are set at a minimum value of $16.5 million. Evercore has also committed up to $50 million to Trilantic's next fund when raised, also in exchange for an interest in the profits of that fund.

The transaction highlights the complicated relationship publicly traded investment banks have had with their private-equity units, whose results can increase earnings volatility and potential for conflicts.

As a result, some firms have decided to jettison their buyout arms. Late last year Greenhill & Co. spun out its private-equity arm into an independent entity, a move that reshaped the boutique investment bank into a pure advisory firm.

The Trilantic deal also raises questions about Evercore's commitment to its own private-equity business, Evercore Capital Partners. That unit's $660 million current fund is fully invested and there are no plans to raise a new fund, according to people familar with the firm.

As designed, the Evercore-Trilantic alliance will give Evercore the potential to reap profits from private-equity investments while giving Trilantic the opportunity to use Evercore's bankers to locate deals.

The deal with Evercore comes a year after Trilantic spun out of the bankrupt Lehman. As part of that deal, the Lehman estate retained a substantial interest and South African businessman Johann Rupert also made an investment in the firm, which is run out of New York by Charlie Ayers and Danny James.

Evercore, too, has deep Lehman connections. Chairman Roger Altman and Chief Executive Officer Ralph Schlosstein both were senior executives at Lehman earlier in their careers.

Evercore shares rose 35 cents, or 1.2%, to $30.09 in 4 p.m. New York Stock Exchange trading.

Write to Peter Lattman at [e-mail]

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