Citi has combined its alternative assets and investment banking divisions, and tapped alternative assets chief executive Vikram Pandit to lead the new entity called Institutional Clients Group, of which he will be chairman and chief executive.
Pandit will report directly to Citi chairman Chuck Prince, who came under fire when Citi reported a 60 percent drop in profits in the third quarter due to subprime mortgage losses. Pandit's promotion puts him on a very short list of people to eventually replace Prince as the leader of one of the largest financial institutions in the world.
The restructuring makes Pandit one of the most senior executives at Citi, just months after he was brought into Citi through its acquisition of his asset management firm, Old Lane Partners. Pandit and several others left Morgan Stanley in 2005 to found Old Lane, which quickly grew to prominence on Wall Street. Citi was estimated in reports to have paid between $600 million (€423 million) and $800 million for Old Lane this July. Old Lane manages roughly $4 billion in fund of hedge funds assets as well as a $500 million Indian direct infrastructure and real estate investment fund.
Old Lane added $4.5 billion to Citi’s alternative investments division, bringing its total assets under management to $59 billion. Citi has said it wants to grow its alternative assets business, which has been performing well of late: Citi Alternative Investments’ second quarter profits for this year were up 77 percent from 2006. This growth reflected “both realised and mark-to-market gains across private equity, hedge fund and other portfolios”, the firm said in a statement at the time.
A division of Citi Alternative Investments, Citi Private Equity, which makes direct and fund investments, is led by John Barber.
This June the alternative assets division also launched a team to make investments in infrastructure.
The latest restructuring has resulted in several other promotions. Michael Klein and James Forese are now co-chief executives of the investment banking side of the Institutional Clients group. Forese replaces Tom Maheras, who is leaving Citi to “pursue other interests”, the firm said in a statement. John Havens replaces Pandit as president and chief executive of the alternative assets side.