Citi Hedge Fund Spinoff A Management Give-Away

Dec 21 2012 | 11:08am ET

Citigroup will literally give away most of its hedge fund unit, as it seeks to come into compliance with the Volcker rule.

The bank is giving a 75% stake in Citi Capital Advisors to the division's employees under a plan negotiated by former CEO Vikram Pandit in his final days at Citi. Those employees will not have to pay for it. Pandit, a former hedge fund manager, spent much of his tenure building Citi's alternative investments business, and CCA includes many of his former colleagues from Morgan Stanley and Old Lane Partners.

Citi will retain a 25% stake in CCA, which will manage up to $2.5 billion of the bank's capital, Bloomberg News reports. Citi will also pay CCA's executives to manage its money while it redeems much of it to comply with the Volcker rule, which strictly limits banks' hedge fund investments and bans banks from proprietary trading.

The new company will have about 10 hedge funds with $3.4 billion in assets, and could be worth up to $100 million, according to Grail Partners and SFC Associates.CCA chief Jonathan Dorfman and James O'Brien will continue to lead the spun-off unit, which does not yet have a new name, and will split 24% of the firm between them. The balance will go to other CCA portfolio managers and employees.


In Depth

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Lifestyle

Einhorns Busts At WSOP, Finishes In 173rd

Jul 15 2014 | 10:48am ET

Greenlight Capital founder David Einhorn’s World Series of Poker won’t end at...

Guest Contributor

Common Risk Parity Misperceptions

Jul 16 2014 | 11:02am ET

Over the past few years, risk parity has become a component of most investors’...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note