US bank Citigroup is winding down Citi Infrastructure Partners (CIP), its $3.4 billion infrastructure fund, the Wall Street Journal has reported.
The newspaper said it had access to a memo sent by the bank to investors in which it said CIP won’t be pursuing further infrastructure deals and will instead focus on managing the assets it has in its portfolio, although Citi is considering transferring those assets to a new manager.
The newspaper report attributes Citi’s decision to fold its infrastructure business to the ‘Volcker rule’, which limits the amount banks can invest in private equity funds and hedge funds. The newspaper says Citi began implementing its exit strategy from these assets as early as 2009.
Citi could not be reached for comment in time for publication.
The news comes after a string of high-profile departures, previously reported by Infrastructure Investor, including the exit of Felicity Gates – long-time global co-head of fund manager Citi Infrastructure Investors (CII) – and partners Colin Campbell, Ghislain Gauthier and John-George Duthie-Jackson.
Holly Koeppel, CII co-head, remains at the helm of CIP.
A market source previously noted recent speculation hinting that Gates had wanted to spin her team out from CII, a unit of Citi Capital Advisors (CCA), the alternative asset platform of Citi. Earlier in 2013, Napier Park Global Capital, a $6.8 billion hedge fund, spun out from CCA.
Gates joined Citi in 2007. She had been a managing director for Deutsche Bank and chief investment officer for Deutsche Asset Management unit RREEF Infrastructure. Citi hired Gates to lead CII – then its newly launched infrastructure initiative – with Juan Bejar, former chief executive of Grupo Ferrovial.
Later, Bejar would depart to chair concessionaire Global Via Infraestructuras. Koeppel, former chief financial officer of America Electric Power, replaced Bejar.
CII is an investor in private toll road operator Itínere Infraestructuras, DP World Australia, utility Kelda Group – which it is seeking to partly divest – as well as airport investment and management company Vantage Airport Group.
In 2008, Citi and Abertis saw a $12.8 billion deal to privatise the Pennsylvania Turnpike collapse and one year later CII failed to finance a $2.5 billion public-private partnership for the Chicago Midway International Airport.
CIP ranked 27th on the 2012 Infrastructure Investor 30, a ranking of the 30 largest investors in infrastructure. It counted the Alaska Permanent Fund Corporation and Future Fund as limited partners, among others.