Citigroup to buy Vikram Pandit's Old Lane Partners

Citigroup Inc on Friday hired a new manager for its Citi Alternative Investments unit by buying the man's hedge fund.

New York-based Citigroup, the largest US financial institution, said it had reached a definitive agreement to purchase Old Lane Partners, which it described as "the highly regarded manager of a global, multi-strategy hedge fund and a private equity fund" with assets of US$4.5 billion.

The financial terms were not disclosed in the announcement.

Citi said the deal was expected to close in the third quarter and that Old Lane "will operate as part of Citi Alternative Investments."

One of Old Lane's founding partners, Vikram Pandit, formerly of the Morgan Stanley brokerage firm, will become chief executive officer of the Alternative Investments unit, the statement added. He will also be a member of Citi's operating and management committee, giving him the ear of Citi's chairman and CEO, Charles Prince.

John Havens of Old Lane will be president of the Alternative Investments unit, and other colleagues also will be given Citi titles.

Pandit replaces Michael Carpenter, who left Citi last May after more than a decade in executive positions to start his own venture. Media reports in recent days said that talks between Citi and Old Lane were under way. There has been speculation that Pandit could be a potential successor to Prince.

Prince said in a statement that the transaction "is an investment as much as it is an acquisition."

The result of the acquisition "will be a powerful combination of tremendous talent and a formidable platform, with US$59 billion in assets" and good growth potential.

Pandit said in the statement that "Citi's network, financial depth, intellectual capital and infrastructure resources should allow us to continue to capture premium returns for our investors across all strategies."