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Blackstone market cap now larger than Lehman’s

The firm that Stephen Schwarzman and Peter Peterson left in 1985 has crumbled to a roughly $3bn market capitalization, versus Blackstone’s $4bn. It follows moves to spin off its $30bn commercial real estate exposure and sell a 55 percent stake in its PE and RE arms.

Shares in the beleaguered Wall Street firm Lehman Brothers sank some 40 percent in Thursday morning trading to $4.38 per share, representing a shrunken market capitalization of roughly $3 billion (€2.15 billion).

It follows the bank's announcement yesterday that it would spin off its $30 billion (€21.4 billion) commercial real estate operation into a separate public company in a bid to prevent it from collapsing at the same time as selling a 55 percent stake in its investment management division. The division includes private equity and private equity real estate operations.

A source told PERE yesterday that the private equity operations housed major alternative investment fund management divisions including Lehman Brothers Merchant Banking, Lehman Brothers Real Estate and groups managing venture capital, infrastructure, credit and funds of funds.

The trading marks the first time that Lehman Brothers has had a smaller market capitalization than The Blackstone Group, a firm founded by two of its most famous alumni – Stephen Schwarzman and Peter Peterson.

Although its own shares are near historic lows, Blackstone at press time had a market capitalization of approximately $4 billion.

Movement in the share prices of both companies has been highly volatile.

Blackstone was founded in 1985 following a power struggle among senior Lehman partners. Lehman Brothers was eventually sold to Shearson American Express.

Schwarzman and Peterson were, respectively, a managing director and chairman and chief executive of Lehman Brothers. Schwarzman became the global head of Lehman’s investment banking business.