Citigroup is seeking to shut down its alternative investments unit, which includes a fund that owns assets like a stake in a UK water supplier and a Spanish toll road, according to a memorandum seen by the Wall Street Journal.
Citigroup is winding down a chunk of its private-equity holdings, part of a broader effort to exit alternative investments that have caused regulatory and financial headaches for the bank.
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The business includes Citi Infrastructure Partners (CII), which manages Citi Infrastructure Partners, a fund that raised $3.4 billion in 2007.
According to the memo, the bank will continue to manage the assets in the fund, but is considering transferring them to a new asset manager.
In an investor memo, partners including CII co-heads Felicity Gates, Ghislain Gauthier, Colin Campbell and John-George Duthie-Jackson, sought interest for an initial 25% stake in the fund, with scope to transferring some or all of its assets to new owners.
Specifically, the fund is seeking to reduce its stake in Kelda, owner of U.K.-based Yorkshire Water, to 20% from 37%.
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By GlobalDataThe move is part of a strategy that the company began implementing in 2009 to exit hedge fund and private-equity units, spurred by both new regulations and poor performance.
The alternative-investment unit, once headed by former CEO Vikram Pandit, came under criticism for being outside Citi’s core business.
In 2009, Citi has placed the portion of its alternative investments that were marketed to retail investors in a pile of assets called Citi Holdings that the company is trying to sell or wind down. The remaining investments for institutional investors were put into a new unit called Citi Capital Advisors.
