Citigroup loses Michael Carpenter

The chairman and CEO of Citigroup Alternative Investments is the latest senior manager to leave a large firm to start an entrepreneurial venture of his own.

Michael Carpenter, 58, an 11-year Citigroup veteran once under consideration to be the bank’s chief executive, has announced he will leave Citigroup by May 1.

He is expected to start an entrepreneurial venture such as a private equity or hedge fund, according to Citigroup. Carpenter took over Citigroup’s small alternative investments group in 2002. Since then he has transformed it into a global business managing $40 billion in private equity, hedge funds, real estate and other investments.

Carpenter said he will continue to advise management until a successor is found. In the mean time Lew Kaden, Citigroup’s Chief Administrative Officer, will oversee CAI on an interim basis.

In 2002 Carpenter was ousted from his job as the investment bank’s chief executive after it was revealed that Salomon Smith Barney, the brokerage and investment banking unit he headed, had provided favorable research reports to companies that gave work to Citigroup’s investment bank. Carpenter’s job was split between two other executives, and a year later he was passed over for Citigroup’s chief executive job, which went to Charles Prince.

Carpenter is the latest executive to jump shipin hopes of establishing an independent alternative investment platform. Just this week it was revealed that former Morgan Stanley executives Vikram Pandit, John Havens and Guru Ramakrishnan, who quit Morgan Stanley in 2005, plan to launch a new hedge fund called Old Lane in New York early next month, almost a year to the day after they quit the investment bank’s equities and institutional securities departments. In January the three launched a new private equity fund that intends to invest $500 million (€410 million) in the Indian infrastructure space.

Carpenter isn’t the only senior manager at Citigroup to be lured away by private equity opportunity. Citigroup chairman Sanford Weill, who is scheduled to leave the bank after its shareholder meeting in mid-April, is reportedly planning to raise a $5 billion private equity fund with Saudi prince Alwaleed bin Talal.