May 6 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, will combine its private equity and infrastructure advisory businesses to create an alternative-asset group.

The combined team will be overseen by Chairman Chad Leat and run by Brad Coleman, New York-based Citigroup said in an internal e-mail to employees today. Kamal Tabet, head of unit that advises private equity firms, will go on sabbatical for the rest of the year, while John Burnham, who oversaw the infrastructure team, will retire.

``We have seen enormous growth in both the size and importance of alternative assets to our business and an ever increasing convergence in the investor base for these assets,'' Jamie Forese, head of sales and trading and capital markets, and Ray McGuire and Alberto Verme, co-heads of Citigroup's investment bank, said in the note. ``We need a more coordinated and holistic approach to these businesses.''

Citigroup is merging the units after the credit crunch brought the pace of private equity firms' dealmaking to a near standstill. Buyout firms have announced $106 billion of deals so far in 2008, about a third of last year's record pace, data compiled by Bloomberg show. LBO bankers at JPMorgan Chase & Co. and UBS AG both quit to join buyout firms in the past five weeks.

Citigroup is the No. 3 adviser to leveraged buyout firms this year after Goldman Sachs Group Inc. and Morgan Stanley, Bloomberg data show. Last year, it advised on the four biggest buyouts of the year, including Kohlberg Kravis Roberts & Co.'s investments in Texas power producer TXU Corp. and First Data Corp.

To contact the reporter on this story: Edward Evans in London at at eevans3@bloomberg.net

Last Updated: May 6, 2008 13:22 EDT