As part of its restructuring efforts, Citigroup Inc. (C) is selling a hedge fund business to SkyBridge Capital, an alternative-investment firm. Though the terms of the deal were not disclosed, the hedge fund business has $4.2 billion of assets under management.
SkyBridge is purchasing the hedge-fund, hedge-fund seeding and hedge-fund advisory businesses of Citi Alternative Investments. This is a strategic fit for SkyBridge, whose assets under management will increase fourfold to $5.6 billion.
As part of this deal, Raymond Nolte who manages the business that Citi is selling will join SkyBridge and will become the chief investment officer and managing partner. He will also bring a team of 20 people with him to SkyBridge.
This specific business is also part of Citi Holdings which consists of Citi’s non core assets. The company aims at de-leveraging Citi Holdings through a number of steps that include joint ventures, divestitures, and asset runoffs. As a matter of fact, the company has already announced the sale of a number of its businesses within Citi Holdings.
Citi, one of the companies severely hurt during the credit crisis, received $45 billion in bailout funds in 2008 through the Troubled Asset Relief Program (TARP). Later, in 2009, around $25 billion of that was converted into common stock.
In December 2009, Citi repaid $20 billion of trust preferred securities held by the U.S. Treasury under the TARP. Citi raised capital to fund the repayment of the bailout money through a capital raise. The company raised $17 billion through a stock offering and $3.5 billion through a debt offering. Currently, the Treasury continues to hold approximately 27% of Citi’s common stock, which it is planning to sell.
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