StepStone to manage $4bn in mature Citi assets

The private equity advisor will manage funds that are near the end of their investment cycle, part of a deal also involving Lexington Partners.

StepStone Group will manage about $4 billion of Citi’s private equity investments in funds that are near the end of their investment periods as part of a larger secondaries deal also including Lexington Partners.

Citi officially confirmed the deal Tuesday that has been widely reported in the media since last week. No financial details of the transaction were disclosed Tuesday, but prior media reports said Lexington is paying about $900 million for its interests. An LP source told PEO Lexington will split the investment between its seventh fund, which has been in fundraising targeting $5 billion, and its $3.8 billion sixth fund. Lexington did not return an email for comment.

As part of the deal, StepStone Group will manage Citi Private Equity’s $4 billion fund of funds, feeder and co-investment funds, according to a statement from Citi. Sources explained that StepStone will provide monitoring, reporting and valuation services on the funds.

“[Most of the] funds are at the end of their investment cycles, but there is still some investment work that needs to be completed,” a person close to the situation told PEO. StepStone declined to comment.

Lexington, meanwhile, is buying a portion of Citi’s proprietary capital investments in the various funds and will provide oversight for the co-investment portion of the CPE businesses, the statement said.

The CPE businesses include investments in private equity funds, co-investments in buyouts and mezzanine investments in mid-market companies. Some CPE employees will join StepStone and Lexington, the statement said.

Citi has been selling off assets within Citi Holdings, its portfolio of non-core operating businesses and assets.

In March, Apollo Global Management won an auction for the $8 billion Citi Property Investors, the real estate arm of the bank.