Citi To Give Managers A Piece Of Alts. Unit

Feb 17 2012 | 3:29am ET

Citigroup may have struck upon a novel way of coming into compliance with the coming Volcker rule.

The bank plans to offer fund managers in its Citi Capital Advisors division a piece of that business. John Havens, Citi's chief operating office, said that under plans being worked out, CCA employees would get a "significant" stake in the company. The move will help Citi attract and hold on to top alternative investments talent and could also attract the billions in third-party capital that Citi needs to keep CCA running in its current form.

"Our competitors are an owner-operated model," he told Bloomberg News. "It was always in the plans but you have to actually have a business that you're comfortable with to go do it."

"We're trying to create a client-centric, alternative asset management business, and this is the final stage of putting that in place. Clients like independent asset managers."

Under the Volcker rule, due to come into force gradually over the next two-and-a-half years, banks will be barred from having more than 3% of their Tier 1 assets invested in hedge and private equity funds, and would not be allowed to account for more than 3% of the assets of any one fund. Currently, Citi's cash accounts for about one-third of CCA's $18.2 billion in assets.

The details of how the new ownership stakes would work are still being hammered out.

"The actual drafting of the terms are underway," Citi spokeswoman Danielle Romero-Apsilos said. "Formulas are currently being negotiated that would allow CCA's management to acquire a portion of Citi's interest in CCA, including their ability to replace a portion of Citi's existing capital with third-party capital."


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Scene Last Night: Clinton, Schwarzman, Corzine, Neidich, Diamond

Nov 25 2014 | 5:52pm ET

Steve Schwarzman had a granddaughter yesterday morning. Last night he sat one table...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.