Citi PE sale not ‘imminent’, old news

The bank’s $8bn private equity, co-investment and mezzanine unit has been slated for sale for a year, well before the ‘Volcker rule’ was unveiled.

A sale of Citi Private Equity (CPE), an $8 billion investment division that manages commitments, direct co-investments and mezzanine investments, is not imminent, sources told PEI.

“There’s no immediate discussion to sell that private equity portfolio,” a source said.

The unit has been part of Citi’s non-core assets the bank plans to unload as a way to raise money and pay down debt since last summer, sources said. The bank will hold on to its other private equity businesses, including Metalmark Capital and Citi Venture Capital International.

Citi is selling CPE and not the other private equity businesses because CPE invests from the bank’s balance sheet, along with some employees’ contributions and third parties commitments. The bank is moving away from the proprietary model and will focus on managing institutional capital.

“Citi as a whole is moving to a more managed investment, client-driven model more than a proprietary model,” a source said.

CPE closed a $3.3 billion fund in 2007, but lost its leader, John Barber, in January 2009 after Barber left for undisclosed reasons. CPE is run by Todd Benson and Darren Friedman.

Citi, 27 percent of which is owned by the US government, divided itself in two last year as a way to restructure its business. One side, Citicorp, houses all the assets the bank considers essential. The other side, Citi Holdings, contains assets like CPE the bank plans to sell.

While CPE is considered non-core to Citi’s future strategy, the business is still being run, a source said. “The assets were not put in holdings to whither and die,” a source said.

The decision to sell CPE came long before US President Barack Obama unleashed his proposal in January to force depository banks to dump in-house private equity and hedge funds businesses because of too much risk. The so-called Volcker rule is named after the former Federal Reserve chairman Paul Volcker who crafted it.

Bloomberg reported earlier this week that Citi was selling CPE.