UK billionaire Joseph Lewis buys 7 per cent stake in Bear Stearns

UK billionaire Joseph Lewis has acquired a 7 per cent stake in US investment bank Bear Stearns for $860 million. The investment firm had to close down two hedge funds with high exposures in the US sub prime market in June.

The acquisition makes Lewis, the 16th richest Briton with an estimated wealth of £1.2 billion, the largest individual investor in Bear Sterns. According to a filing with the US regulator, the Bahamas-based reclusive investor had acquired the shares over the past two months through his Florida-based investment firm Tavistock.

The investment by Lewis is seen as a major shot in the arm for Bear Stearns, which lost $1.6 billion in June to bail out two of its funds hit by sub-prime defaults and led to the resignation of the US investment bank's co-president Warren Spector.

The sub-prime mortgage sector in the US has been hit by record levels of defaults by borrowers with insufficient incomes or poor credit standing having been unable to keep up with their mortgage repayments due to rising interest rates.

This has led to significant defaults to lenders and investment firms with high exposures and fears of the sub-prime upheaval spreading to the wider loans market resulting in the stock market turmoil.