F2i sues Citigroup over infrastructure fund

The Italian infrastructure investor is suing Citigroup over the failed placement of an infrastructure fund in 2007. Citi denies any wrongdoing.

Italian infrastructure fund F2i is suing American bank Citigroup claiming damages against the failed placement of an infrastructure fund in 2007, a spokeswoman from F2i told InfrastructureInvestor.com.

F2i: said to be
looking for €100m

The lawsuit, filed in a Milan court, alleges there was a conflict of interest as the American bank started raising its own infrastructure fund – the $3.4 billion Citi Infrastructure Investors – after it was hired to place F2i’s vehicle. F2i’s spokeswoman refused to comment on how much the Italian fund is claiming in damages but Italian newspaper Il Sore 24 Ore claims the figure is €100 million.

F2i hired Citigroup in 2007 to raise money for its infrastructure fund, which ended up closing on €1.85 billion in early 2009 with commitments from Merrill Lynch, BIIS (part of Intesa Sanpaolo), state-backed Cassa Depositi e Prestiti, Unicredit, seven Italian banking foundations and two pension funds.

But at the end of its 18-month contract with F2i, Citigroup told the Italian fund that it was unable to find any investors for the 15-year vehicle at the same time that it was raising over $3 billion for its own vehicle, reports Il Sole 24 Ore. The newspaper also writes that Citigroup had promised to raise up to €1 billion for F2i, including a €100 million investment from the bank itself.

Citigroup said in a statement that it would “vigorously defend” itself, adding that “the lack of international investment in the F2i fund was due to a complex number of factors completely independent from, and unrelated to, the work done by Citi during the course of two years”.

F2i, together with Paris-based investor AXA Private Equity, bought an 80 percent stake in gas utility Enel Rete Gas in the summer of 2009 for €480 million.