Citigroup Inc. (C) announced that it will sell stake in Bellsystem24 to U.S. private equity firm, Bain Capital Partners, in a deal that values the Japanese call center operator at $1.1 billion.
The company announced on Sunday that it will sell its 93.5% controlling stake in Bellsystem24 − which it held through its Citigroup Capital Partners Japan Ltd. − to Bain Capital Partners through a tender offer. The tender offer is expected to start on or before Nov 20 and be completed on Dec 30, 2009. Under the terms of the deal, Citi will receive 93.5 billion of yen ($1 billion) in cash.
Following the completion of the deal, Citi Holdings’ assets will be reduced by $1.2 billion. However, Citi’s net income and capital ratios will not be significantly impacted by this stake sale, the company said.
Citigroup, once the largest U.S. bank by assets, fell behind last year after a series of acquisitions by rivals. Citi has been among the banks hardest hit by the credit crisis and the recession. The bank has been severely hurt by billions in losses and write-downs of problem loans and toxic assets.
The U.S. government injected $45 billion in bailout funds into the bank and currently has a 34% equity ownership stake. Citigroup has been selling its assets as part of its restructuring efforts. In October, the company completed the sale of its Japanese brokerage business to Sumitomo Mitsui Banking for $8.7 billion.
We expect Citigroup to incur higher credit losses in the upcoming quarters as its restructuring process continues. However, such strategic sell-out bodes well for the company.
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