Citigroup plans to sell or split off its $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 $2 billion of Citigroup's money, said the sources, 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 source said.
Citigroup, 27 per cent owned by the government following a bailout in 2008, is selling almost a third of its $1.86 trillion of assets under regulatory pressure to shrink.
Chief executive 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 the January 2009 departure of John Barber, who had led the unit for nine years. 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 $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 $3.8 billion in several funds, one person said. It invests in energy, health care, financial and industrial companies, according to Metalmark's website.
The bank also is keeping another fund, Citi Venture Capital International, which focuses on China, India, Central and Eastern Europe and Latin America.
Bloomberg