Citi secondaries sale side-steps infra fund

As Citi hands over the management for $4bn of its private equity funds to investment advisor StepStone Group, Citi Infrastructure Investors, the investment bank’s captive infra investment arm, will remain on the firm’s books.

Citi Infrastructure Investors, the captive infrastructure investment arm of investment bank Citi, will remain a part of the firm as the bank prepares to shed $4 billion of private equity interests to investment advisor StepStone Group.

As part of the deal, confirmed by Citi last week, StepStone will manage about $4 billion of Citi’s private equity investments in funds that are near the end of their investment periods. These include funds of funds, feeder and co-investment funds within the Citi Private Equity, or CPE business, Citi said in a statement.

Secondaries investor Lexington Partners will also acquire “a portion” of Citi’s “proprietary capital investments in various funds” and provide oversight for the CPE business, Citi said.

Financial terms of the transaction were not disclosed, but prior media reports said Lexington is paying about $900 million for its interests.

The deal side-steps Citi Infrastructure Investors because the $3.4 billion fund sits in a separate Citi division, Citicorp, that is not for sale. Citicorp houses all of Citi’s “core” businesses the firm intends to keep on its balance sheet. The CPE business, on the other hand, sits within its non-core division called Citi Holdings, which Citi hopes to wind-down or sell.

The bank split itself into Citicorp and Citi Holdings in January 2009 after the US government bailed out Citi with $45 billion of taxpayer dollars.

In December 2009 Citi paid back $20 billion of the bailout and said in a report in March it is using $23 billion of the money to “expand the flow of credit to US consumers, communities and businesses”.

Citi Infrastructure Investors did not return a request for comment.