Citigroup Looks To Close 2.4 Billion Division (C)
For the year ended 2012, the company’s collection of hedge fund, private equity, and real estate investments totalled just 2.38 billion. The Wall Street Journal reported that these funds include stakes in a UK water supplier and Spanish toll road.
In their annual report, Citi disclosed that the SEC is investigating “alternative investment funds managed and marketed by certain Citigroup affiliates that suffered substantial losses during the credit crisis.” In late 2012 a 400 million dollar lawsuit was launched, with the investor claiming he was misled.
The company said in a memo: “Following a decision by Citigroup in 2012 to exit the remaining businesses of Citigroup Alternative Investments, the CII [Citi Infrastructure Investors] Partners plan to spinout into a new investment management business. Citigroup has indicated to the CII Partners that finding a suitable sponsor is a prerequisite to Citigroup considering transferring any of the existing CII asset to management.”
Citi Infrastructure Investors is a 3.4 billion dollar fund, with 500 million contributed by Citigroup, that invests in transportation and utility infrastructure.
A series of failed investments have barred the fund from future use of funds. These include 12.8 billion for a Pennsylvania Turnpike and 2.5 billion for Chicago’s Midway airport.
Its understandable that the group would close its alternative investment division following a combination of lawsuits, poor investments, and Michael Corbat’s vision for Citigroup to focus on banking.
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