Bloomberg News

Citigroup Sells $1.7 Billion of LBO Fund Stakes to Axa Unit

June 08, 2011

(Updates with sales of holdings in fifth, sixth paragraphs)

June 8 (Bloomberg) -- Citigroup Inc. agreed to sell $1.7 billion of leveraged buyout assets to Axa SA’s private equity unit as the third-biggest U.S. bank moves to shrink its balance sheet.

Axa Private Equity is buying about 207 interests including stakes in buyout funds managed by KKR & Co. LP, Blackstone Group LP and Carlyle Group, and investments Citigroup made directly in some companies such as First Data Corp., Dominique Senequier, Axa Private Equity chief executive officer, said in a phone interview. The price at which the holdings have been acquired wasn’t disclosed in a joint statement today.

Citigroup has been selling assets following its $45 billion taxpayer bailout, and transferred those businesses, loans and securities targeted for disposal into its Citi Holdings division. Regulators are also requiring banks to reserve more capital for riskier assets, including stakes in buyout funds, making them less attractive for lenders to hold.

“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,” Mark Mason, chief operating officer of Citi Holdings, said in the statement.

The sale included New York-based Citigroup’s stake in Energy Future Holdings Corp., formerly known as TXU Corp., according to a person familiar with the matter. The Dallas-based firm was sold in 2007 to a group led by KKR and TPG Capital in a $43.2 billion transaction, the largest buyout in history.

Other Holdings Sold

Citigroup also sold investments in SolarReserve Inc., a Santa Monica, California-based developer of solar-thermal power plants, and MBA Polymers Inc., a plastics recycling firm based in Richmond, California, according to the person, speaking on the condition of anonymity because the matter is private.

Citigroup sold more than $500 million of investments in funds managed by buyout firm CVC Capital Partners Ltd., three people with knowledge of the matter previously said in January. Last year, it transferred management of $4 billion of interests in its own buyout funds to StepStone Group LLC and sold its stakes in the funds to Lexington Partners Inc.

Axa Private Equity is raising $3.5 billion to buy holdings in leveraged-buyout funds from banks and other investors seeking to reduce their stakes, a person with knowledge of the matter said last week. The firm bought $1.9 billion of investments in private-equity funds from Bank of America Corp. in April 2010.

‘Fair Price’

“This is the culmination of a highly collaborative and close working relationship with Citigroup,” Senequier said in the statement. “The excellent visibility of the quality of the assets enabled us to offer a fair price.”

About 60 percent of the portfolio comprises U.S.-based assets, she said.

Axa Private Equity, along with Lexington Partners and London-based Coller Capital Ltd. are raising a total of $14.5 billion this year to buy fund commitments that banks and other investors are seeking to sell after the 2008 financial crisis. Almost $11 billion was raised last year for these so-called secondary transactions after a record $22.8 billion in 2009, according to London research firm Preqin Ltd.

--With assistance from Donal Griffin in New York. Editors: Jon Menon, Stephen Taylor

To contact the reporter on this story: Anne-Sylvaine Chassany in London at achassany@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus