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Skybridge to acquire Citi hedge fund business, will make SkyBridge a $5.6bn firm

Wednesday, April 14, 2010
Opalesque Industry Updates - Citigroup Inc. said it will sell its hedge-fund business to alternative-investment firm SkyBridge Capital LLC, as it sheds yet another of its noncore assets.

Financial terms of the deal, in which SkyBridge will buy Citi Alternative Investments' hedge-fund, hedge-fund seeding and hedge-fund advisory businesses, weren't disclosed. CAI's investments under management and advisory total $4.2 billion. SkyBridge said the deal will position it as "one of the leading global alternative asset managers" with $5.6 billion in assets under management.

The businesses being acquired are part of Citi Holdings, which is made up of Citi's noncore assets and businesses that the financial-services giant is in the process of unloading. Citi's Raymond Nolte, who has led the businesses at CAI since 2005, will become chief investment officer and a managing partner at SkyBridge, bringing with him a team of 20.

"The integration of a fund-of-hedge-funds business is a natural fit with the SkyBridge platform, and this deal is a result of our long-term strategy to acquire assets that maximize value for investors," said Skybridge Managing Partner Anthony Scaramucci.

Citi last year earmarked $715 billion in noncore assets to be sold, liquidated or wound down as it sought to reduce its risk profile during the market meltdown that saw the U.S. government take a roughly one-quarter ownership stake currently at 27%. Roughly one-quarter of those assets had been shed by the end of 2009.

Shares of Citigroup rose 2.2% to $4.72 in recent premarket trading amid the release of strong first-quarter results from rival J.P. Morgan Chase & Co.

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