Citigroup Said to Weigh Sale of $1 Billion in Fund StakesSabrina Willmer and Kiel Porter
Citigroup Inc., which is scaling back illiquid investments to comply with rules that limit risk-taking by banks, may sell about $1 billion in holdings managed by its former private-equity business, according to five people familiar with the matter.
The bank is considering selling its stakes in funds managed by Citi Venture Capital International, or CVCI, a private-equity manager that Citi sold to New York-based Rohatyn Group in December, said the people, who asked not to be identified because the talks are private. Rohatyn plans to give investors in two CVCI funds the option to sell their holdings to other buyers, who would provide fresh capital for new deals, said one of the people.
Citigroup and other banks have been shedding assets and operations as they come under regulatory pressure from the Volcker Rule, the portion of the Dodd-Frank Act that seeks to limit risk-taking by financial companies. Citigroup last year sold its Metalmark Capital private-equity business, and spun out its internal hedge-fund unit, renamed Napier Park Global Capital. The Volcker rule prohibits banks from investing more than 3 percent of Tier 1 capital in private-equity or hedge funds, or owning more than 3 percent of a fund.
“Citi has been considering several options for our private equity funds to comply with Dodd-Frank,” Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, said in an e-mailed statement.
Chris Kittredge, a spokesman for Rohatyn at Sard Verbinnen & Co., declined to comment.
Rohatyn, which is interviewing advisers to manage the sales process, is exploring a deal in response to increasing market demand to buy private-equity holdings through the secondary market, said one of the people familiar with the matter. Rohatyn plans to give investors in two growth funds, established in 2005 and 2007, the option to exit their holdings before Citigroup is able to sell, the person said.
CVCI was founded in 2001 within the bank’s alternative asset-management platform and managed $4.3 billion at the time of the sale agreement. The CVCI unit, which invests in the emerging markets, has offices in Singapore, Hong Kong, Mumbai, New Delhi, London, New York and Santiago, according to Rohatyn’s website.