London, Aug. 31: Wall Street investment bank Lehman Brothers has engaged in talks with a group of foreign government-backed investment funds this weekend to secure billions of dollars in new equity capital.

Lehman has intensified talks in recent days with Korea Development Bank (KDB), the South Korean government-backed lender, about a $6-billion capital injection. KDB has drafted in bankers from the heavyweight advisory boutique Perella Weinberg to provide counsel on the talks, which could be concluded this week.

The acceleration of negotiations underlines the urgency with which one of the US banking industry’s most venerable names is seeking capital.

Lehman has lined up alternative investments from other sources, such as Citic Securities, a Chinese brokerage. Investors from Abu Dhabi and Qatar have also been invited to participate in the capital-raising quest.

Under the structures being discussed by Lehman executives, KDB could buy up to 25 per cent of Lehman, which has a market value of just $11.2billion after a slump in its share price this year.

If Lehman proceeds with a deal with Citic or the Gulf investors, it is likely to sell no more than 10 per cent of itself to each of those funds, but could combine the sale with broader equity-raising in the open market. Richard Fuld, the bank’s chairman and chief executive, who is determined to avoid a sale of the bank’s prized assets at distressed prices, is understood to have assigned several of his key executives to look at different fund raising scenarios.

Other options open to Lehman include the sale of part or its entire asset management arm.

“The preferred option is not to sell any of it unless they cannot raise enough from external investors,” sources involved in the talks said. Dozens of parties, including JC Flowers and Kohlberg Kravis Roberts, have expressed an interest in the business.