Citigroup Inc plans to sell or split off its US$10 billion Citi private equity unit, expanding the list of money-management businesses the US bank is disposing of to reduce debt, people familiar with the matter said.
Citi private equity, which takes minority stakes in companies and invests in other buyout funds, oversees about US$2 billion of Citigroup’s money, said the people, who declined to be identified because the sale talks are private. The rest is from outside investors.
Managers of the decade-old unit, led by Todd Benson and Darren Friedman, have discussed buying it for themselves alongside new partners or with other financing, one person said.
Citigroup, 27 percent owned by the government following a bailout in 2008, is selling almost a third of its US$1.86 trillion assets under regulatory pressure to shrink. Chief executive officer Vikram Pandit plans to keep a smaller buyout unit the bank bought in late 2007, a few months after he joined, the people said.
“Citi has been going in and out of these different investing vehicles, both private equity and hedge funds,” said Steven Kaplan, a professor at the University of Chicago Booth School of Business who studies the private-equity industry. “It’s been a game of musical chairs.”
Benson and Friedman stepped in as co-heads of Citi private equity after departure of John Barber — who had led the unit for nine years — in January last year. Neither of the co-heads returned calls for comment, and Citigroup spokeswoman Shannon Bell declined to comment.
Other money-management units marked for sale or closure include the Citi property investors’ real-estate unit, which oversees US$12.5 billion; and the hedge fund management group, which allocates money to hedge funds on behalf of its own investors, the people said.
Citigroup plans to keep Metalmark Capital LLC, a buyout firm the bank agreed to buy for an undisclosed sum in December 2007. Headed by former Morgan Stanley executive Howard Hoffen, Metalmark oversees almost US$3.8 billion in several funds, one person said. It invests in energy, healthcare, financial and industrial companies, Metalmark’s Web site said.
Pandit, 53, decided to keep Metalmark because he preferred its management and strategy to those of Citi private equity, three people said.
Pandit and John Havens, who heads the trading and investment-banking division, worked with Hoffen at Morgan Stanley from the late 1980s through the early 2000s.
The bank is also keeping another fund, Citi Venture Capital International, which focuses on China, India, Central and Eastern Europe and Latin America.
Citi capital advisers has about US$14 billion under management, a figure that excludes the funds earmarked for disposal, people familiar with the matter said.
At the end of 2007, the division oversaw US$73 billion. More than a dozen funds were shuttered or frozen, including Pandit’s Old Lane Partners fund, which Citigroup bought in 2007 for US$800 million.
The bank stopped reporting the alternative-investing division’s results after the first quarter of 2008, when it had a net loss of US$509 million.
The decision to sell Citi private equity was made last year, before US President Barack Obama on Jan. 21 proposed banks be forced to divest their private-equity firms and hedge funds, the people familiar with the matter said.
Ownership of such businesses can expose taxpayers to the risk of further bank bailouts, the White House said.
NO RECIPROCITY: Taipei has called for cross-strait group travel to resume fully, but Beijing is only allowing people from its Fujian Province to travel to Matsu, the MAC said The Mainland Affairs Council (MAC) yesterday criticized an announcement by the Chinese Ministry of Culture and Tourism that it would lift a travel ban to Taiwan only for residents of China’s Fujian Province, saying that the policy does not meet the principles of reciprocity and openness. Chinese Deputy Minister of Culture and Tourism Rao Quan (饒權) yesterday morning told a delegation of Chinese Nationalist Party (KMT) lawmakers in a meeting in Beijing that the ministry would first allow Fujian residents to visit Lienchiang County (Matsu), adding that they would be able to travel to Taiwan proper directly once express ferry
FAST RELEASE: The council lauded the developer for completing model testing in only four days and releasing a commercial version for use by academia and industry The National Science and Technology Council (NSTC) yesterday released the latest artificial intelligence (AI) language model in traditional Chinese embedded with Taiwanese cultural values. The council launched the Trustworthy AI Dialogue Engine (TAIDE) program in April last year to develop and train traditional Chinese-language models based on LLaMA, the open-source AI language model released by Meta. The program aims to tackle the information bias that is often present in international large-scale language models and take Taiwanese culture and values into consideration, it said. Llama 3-TAIDE-LX-8B-Chat-Alpha1, released yesterday, is the latest large language model in traditional Chinese. It was trained based on Meta’s Llama-3-8B
STUMPED: KMT and TPP lawmakers approved a resolution to suspend the rate hike, which the government said was unavoidable in view of rising global energy costs The Ministry of Economic Affairs yesterday said it has a mandate to raise electricity prices as planned after the legislature passed a non-binding resolution along partisan lines to freeze rates. Chinese Nationalist Party (KMT) lawmakers proposed the resolution to suspend the price hike, which passed by a 59-50 vote. The Taiwan People’s Party (TPP) voted with the KMT. Legislative Speaker Han Kuo-yu (韓國瑜) of the KMT said the resolution is a mandate for the “immediate suspension of electricity price hikes” and for the Executive Yuan to review its energy policy and propose supplementary measures. A government-organized electricity price evaluation board in March
NOVEL METHODS: The PLA has adopted new approaches and recently conducted three combat readiness drills at night which included aircraft and ships, an official said Taiwan is monitoring China’s People’s Liberation Army (PLA) exercises for changes in their size or pattern as the nation prepares for president-elect William Lai’s (賴清德) inauguration on May 20, National Security Bureau (NSB) Director-General Tsai Ming-yen (蔡明彥) said yesterday. Tsai made the comment at a meeting of the Legislative Yuan’s Foreign Affairs and National Defense Committee, in response to Democratic Progressive Party (DPP) Legislator Wang Ting-yu’s (王定宇) questions. China continues to employ a carrot-and-stick approach, in which it applies pressure with “gray zone” tactics, while attempting to entice Taiwanese with perks, Tsai said. These actions aim to help Beijing look like it has