Private Equity News & Analysis

Citigroup closes $3.3bn fund

The US financial services giant has closed its latest buyout fund $800m ahead of target as it looks to leverage its relationships with buyout firms for co-investment opportunities.

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Citigroup Private Equity has closed Citigroup Capital Partners II, a $3.3 billion fund, to invest directly in private equity deals in partnership with buyout firms.

The bank, which had targeted $2.5 billion, is looking to build on its already lucrative franchise advising private equity funds. According to numbers from data firm Dealogic, Citigroup generated revenues of $928 million in 2006, as an advisor to the industry. The bank was placed fourth behind rivals JPMorgan, Goldman Sachs and Credit Suisse.

Citigroup plans to leverage its existing relationships to invest alongside a variety of private equity firms and across a range of industries, geographies and transaction sizes. 

The fund included commitments from Citigroup clients and employees, as well as $1 billion from the bank’s balance sheet. 
 
John Barber, managing partner of Citigroup Private Equity, said:  “We believe there continues to be a significant need for capital in the private equity marketplace.  CCP II provides a valuable and timely source of capital that has enabled Citigroup Private Equity to partner with premier private equity firms to seek to build a diverse portfolio of investments.”

Citigroup’s fundraising follows a similar development at Lehman Brothers, which closed a $1.6 billion co-investment fund in September last year. Goldman leads the investment banking pack with its $8.5 billion fifth buyout fund.

As part of Citigroup Alternative Investments arm, Citigroup Private Equity manages and advises on approximately $12 billion in private equity fund commitments, non-control direct private equity investments and mezzanine investments on behalf of proprietary accounts and clients of Citigroup.

It has more than 75 direct private equity investments, the most high profile of which was its 2006 investment alongside Cerberus Capital Management for a 51 percent stake in GMAC, the US carmaker GM’s finance arm.

Last week, the bank hired Mathias Giebken, its first head of alternative investment sales for Germany and Austria.