Citi-backed Big Red sells 20 percent to Dr Pepper

The portfolio company of defunct mid-market private equity group Citi Venture Capital has partially exited to the soft drink company’s largest distributor. The Citi fund’s portfolio remains in limbo with William Comfort managing operations in the short term.

Citi has partially exited Waco, Texas-based soft drink company Big Red, selling a 20 percent stake to Dr Pepper Snapple Group, PEO has confirmed.

Dr Pepper is the largest distributor of Big Red products in the US, accounting for 80 percent of total volume.

Recently shuttered Citi Venture Capital purchased Big Red for an undisclosed amount one year ago. In connection with the deal, Big Red acquired AllSport, a sports drink originally founded by Pepsi.

Citi Venture Capital, a $500 million mid-market private equity fund, was shut down after less than two years of operation and only two acquisitions. The group’s only other portfolio company is Kentucky-based flatware company Waddington North America.

The unit’s chairman, William Comfort, remains at Citi and continues to manage the portfolio. The rest of the investment team was made redundant.

Citi Venture Capital’s portofio will eventually meet one of three potential outcomes, according to a source familiar with the situation: a sale to Comfort, a sale to another “suitable buyer” or absorption into the portfolio of Metalmark Capital, one of Citi’s three active private equity groups.

New York-based Metalmark is a Morgan Stanley spin-out acquired by Citi in December 2007. The group continues to manage several North America-focused funds, raised while the team was still part of Morgan Stanley, as well as Metalmark Capital Partners, a $1.2 billion fund that was established following the firm’s founding.

Citi Private Equity, managed by John Barber, manages private equity commitments, directs co-investments and mezzanine investments out of its London and New York offices. London-based Citi Venture Capital International, meanwhile, is an emerging markets growth investment group with Dipak Rastogi at its helm.

Citi has had at least two other private equity groups become independent: Court Square Capital Partners spun out of Citi in 2006 and CVC Capital Partners spun out in 1993.