Citi has shuttered Citi Venture Capital after less than two years of operation, although Citi has maintained an internal private equity division since the 1960s.
The division “no longer made sense” in the context of the firm's alternatives business, according to a source familiar with the situation.
The unit's chairman, William Comfort, remains at Citi and continues to manage the portfolio. The rest of the investment team, which included senior executives Alexander Coleman, Joseph Levy and Tony Bienstock as well as several junior employees, was released.
The existing portfolio includes Texas beverage company Big Red and Kentucky-based plastic flatware company Waddington North America. It remains to be seen what will happen to the portfolio, according to the source, who identified three possible outcomes: a sale to Comfort, a sale to another “suitable buyer” or absorption into the Metalmark Capital portfolio.
New York-based Metalmark, a spinout from Morgan Stanley, was acquired by Citi in December 2007. The group continues to manage several North America-focused funds, which remain captive at Morgan Stanley, as well as Metalmark Capital Partners, a $1.2 billion fund that was established following the firm's founding.
Citi's two other private equity divisions will remain unaffected by the closure of Citi Venture Capital. Citi Private Equity, headed by John Barber, manages private equity commitments, direct 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.
The most recent reshuffling of Citi's private equity operations is the latest in a long line of changes. Citi launched the first unit in the late 1960s under the name Citibank Venture Capital, and Comfort took the helm several years thereafter. That group, at various stages, was named Citigroup Venture Capital and Citicorp Venture Capital as the result of firm-wide rebranding, eventually becoming CVC Equity Partners.
CVC Equity Partners then spun out as independent firm Court Square Capital Partners in 2006. The $3.1 billion it raised in the process made it among the most successful private equity spinouts ever. Long-time chief Comfort continues to serve on the investment committee of Court Square.
CVC Equity Partners was the second major spinout from Citi. CVC Capital Partners, which launched in 1981, spun out to become an independent group in 1993. The firm now has significant operations in Europe and Asia.
Citi Venture Capital was formed approximately a year after the Court Square team's departure when Comfort was given $500 million to invest in the mid-market, according to a source familiar with the situation.
AUDA TARGETS $500M FOR SECONDARY FUND
Alternative investment firm Auda International is targeting $500 million (€320 million) for its first secondaries fund since the departure of its entire former team. Auda appointed former AlpInvest Partners executive Tim Brody as managing director and head of the private equity secondary program in January 2008. ASF I closed on $410 million in 2004 and was invested by a team which then spun out to form Connecticut-based Newbury Partners in 2006. ASF II will target mid-size deals of $10 million to $50 million and expects to hold a first close imminently. It will acquire interests in buyout, growth, venture and other private equity funds and may purchase direct portfolios.
CALTIUS CLOSES MEZZANINE VEHICLE ON $500M
Caltius Mezzanine has closed its fourth fund on its $500 million (€320 million) hard cap following three months of fundraising. The initial target was $400 million. Around 60 percent of the investors, a mix of European and US limited partners, have previously invested with Caltius while 40 percent are new. Investors include global fund of funds Adams Street Partners, AlpInvest Partners, Pathway Capital Management and Portfolio Advisors. US pension funds State of Wisconsin Investment Board and New York State Teachers' Retirement System have also invested. The mandate of Fund IV is to provide junior capital investments of $10 million to $75 million to mid-market companies.
DENHAM CLOSES GLOBAL ENERGY FUND
Denham Capital Management has hit the $2 billion (€1.3 billion) hard cap on its fifth global energy and commodities fund. The Boston-based firm's first independently raised vehicle since spinning out of failed hedge fund Sowood Capital last summer will target investments in the oil and gas, mining, timber and power industries as well as carbon assets and energy-related infrastructure. Formed in 2004 as Sowood's in-house private equity energy unit, Denham has successfully retained much of its original investor base, attracting 90 percent of existing limited partners to the latest fund. Denham typically targets investments in the $50 million to $250 million range across all stages of business development.
CAPITAL INTERNATIONAL RAISES $2.25BN
Capital International, the emerging markets arm of Capital Group, one of the world's largest investment managers, has raised a $2.25 billion (€1.44 billion) global private equity fund. Its fifth such fund, the vehicle is nearly four times the size of its predecessor, which closed on $618 million in 2004, with more than 60 percent of its capital committed by new investors. The substantial increase in capital indicates growing demand from limited partners to allocate to emerging markets. More than a quarter of the fund's capital has already been committed across six investments.
LIGHTSPEED RAISES $800M FOR FUND VIII
Lightspeed Venture Partners has closed its eighth fund on $800 million (€517 million). Fund VIII will focus on early-stage US investments while leveraging the firm's dedicated teams in Israel, China and India. Lightspeed put Israel and China teams in place in 2006 with India being added more recently. In the US and Israel the firm will primarily focus on seed and early-stage investments in information technology and cleantech. In China and India, Lightspeed will make early-stage technology investments as well as growth-stage investments in diverse product and service businesses. The vehicle will invest $10 million to $20 million over the life of early-stage companies and as much as $30 million-plus in growth-stage companies.
OAKTREE COLLECTS $11BN FOR DISTRESSED
Oaktree Capital Management has closed the largest distressed debt fund raised to date with commitments of $10.9 billion (€7 billion). The OCM Opportunities Fund VIIb includes $10.6 billion of limited partner commitments and $300 million from Oaktree executives, according to a source close to the firm. The Los Angeles-based debt specialist, led by chairman and co-founder Howard Marks, has fully invested its OCM Opportunities Fund VII, which closed on $3.5 billion in early 2006. Limited partners in the mega-fund include state pension funds Illinois Teachers' Retirement System, Oregon Investment Council and Pennsylvania State Employees' Retirement System, as well as funds of funds Conversus Capital and Private Equity Holding.