GLG Estimates Lehman Exposure Is Less Than 1% Of AUM

Oct 2 2008 | 9:53am ET

Much uncertainty remains about how the collapse of Lehman Brothers Holdings will affect GLG Partners, but the hedge fund said again today that it believes its losses will be relatively small.

In a letter to investors further updating them on GLG’s efforts to minimize its exposure to Lehman’s European branch, Lehman Brothers International (Europe), the hedge fund said it estimates the combined direct exposure of its funds to Lehman to be $95 million, less than 1% of its assets under management. But GLG acknowledges that the somewhat rosy picture could become uglier if any of its assumptions prove wrong.

The London-based firm told investors that its exposure estimates are based on estimates of how much of each fund’s assets Lehman was required to treat as client money, capital it expects to be returned after each fund repays its debt to Lehman. The firm also mentioned a number of “bespoke arrangements” with Lehman designed to more fully protect the hedge fund’s remaining assets with the firm.

“We have good reason to believe that these arrangements were adhered to by LBIE but until we meet with the Administrators some uncertainty will remain,” GLG wrote. “We have been pressing to begin a constructive dialogue with the Administrators soon which will enable us to refine our assessment further.”

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