Feb 4, 2010
Citibank out of Private Equity , Real Estate
Private Equity is a specialised business, in that the players concerned are unlikely to turn up to defend their investments and even trading actions to a Senate Banking Committee, even as Volcker deigns to equate risk limits umbrella to the very large “Too Big to fail” sky line.
Citibank made a lot of early effort to expand its empire in all directions and at each stage when managing it got tough they found the PE group ready to play with it. It happened for its Banking products software unit, i-flex, now sold to Oracle, and it happened to its offshored KPO and call center businesses sold for a R$125million and a ten-year customer contract a bribe to get the captive off its hands.
Citi Private Equity currently oversees $2 billion in PE investments, carved out from other such deal trade offs and organics squiggly that grew the bank in the ‘oughts’ Bloomberg TV was pretty detailed with the rest of the numbers below. Citi has to sell of one-third of its $2 trillion in assets to close out the 27% government stake and stay profitable and clean.
Citigroup Inc. plans to sell or split off its $10 billion Citi Private Equity unit, expanding the list of money-management businesses the U.S. bank is disposing of to cut debt, people familiar with the matter said.
(..) Managers of the decade-old unit, led by Todd Benson and Darren Friedman, have discussed buying it for themselves along new partners or with other financing, one person said.
A smaller $200m buy out fund would still remain with Citi till regulations say otherwise.
Citibank also never made good on its extended vision. With 27% government ownership, its proud assertions of intellectual leadership and the new world ring hollow. Medina Mora, the new Consumer Banking chief gets in inheritance a 5500 strong ATM deal with 7-eleven which was done as late as 2007, when BofA and Wels Fargo had all but carved out the 50 states / nary the 31 states the ATM deal brought. Not only does Medina Mora get the Consumer banking business as added responsibility, he gets to lead the grand design in Volcker’s risk management regime with the 13 Feds across the 48/50 states.
Funnily, Medina Mora’s appointment comes with a parallel rumor almost encouraging him to pull the rug from under hedge fund activist Vikram Pandit’s feet.
A lot of commercial real estate has fallen by the side as well.
Citigroup has selected a short list of final bidders for Citi Property Investors.(..) The unit owns commercial property in the U.S., Europe and Asia valued at $5 billion to $10 billion, one of the people said. New York-based Citigroup valued the unit’s capital and real-estate assets at $12.5 billion as of June, according to its Web site.
(..)Commercial prices have dropped 43 percent and may fall as much as 55 percent from the October 2007 peak, Moody’s Investors Service said Nov. 23.
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