Citigroup to unload private equity portfolio to AXA PE for $1.7bn
Citigroup (NYSE:C) said Wednesday that it has agreed to sell a portfolio of private equity interests to Paris-based buyout firm AXA Private Equity for US$1.7 billion, in the bank's latest effort to raise capital by divesting non-core assets after the financial crisis.
The sale includes a portfolio of 207 limited partner (LP) interests in private equity buyout funds, and a number of direct investments into certain companies.
The deal represents one of the largest ever secondary private equity transactions, and follows from AXA's US$1.9 billion purchase of buyout funds from Bank of America last April.
Many private equity firms are now looking to build their secondaries strategy, as portfolios of assets are now gaining in value, after seriously taking a hammering during the recession.
The idea is that buying these LP interests on the secondary market will allow these firms to make signficant returns, as they are betting the portfolios will appreciate even further over time.
"Having an international team with global reach, combined with a diversified buyout interests portfolio gives us excellent perspective on pricing and quality, allowing us to be opportunistic on behalf of our investors," said managing director of AXA's fund-of-funds unit, Vincent Gombault.
"The Citigroup assets are some of the best-managed funds offering strong potential in terms of value creation."
Citigroup has been shedding assets continually since the recession hit, in an effort to focus its attention on core divisions like its retail and investment banking units. In 2010, the US bank sold a portfolio of private equity interests worth about $1 billion to Lexington Partners.
AXA said the latest portfolio sold by Citi was funded by Citigroup proprietary capital, and does not include funds or investments that were managed by Citi.
The assets include direct stakes in 18 companies including First Data and TXU Energy, as well as stakes in funds managed by buyout legends KKR, Blackstone, Carlyle, Clayton, Dubilier & Rice and Providence Equity Partners.
"This sale marks the completion of a significant share of Citi Holdings' proprietary private equity investments and demonstrates the progress the Citi Holdings team is making in reducing non-core assets on our balance sheet," said Citi COO, Mark Mason.
AXA, with $25 billion of assets under management, works in a number of asset classes, including funds of funds, direct funds, mezzanine and infrastructure financing, mid-cap and small-cap leveraged buyouts, and venture capital. It has offices in Paris, Frankfurt, New York, Singapore, Milan, London, Zurich and Vienna.
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