Citi Selling Off Infrastructure Fund Assets As Managers Leave

Aug 13 2013 | 11:33am ET

Citigroup has begun to liquidate a private-equity infrastructure fund after most of its management team left the bank.

Citi has started to sell off stakes from Citi Infrastructure Investors' six-year-old, $3.4 billion fund, The Wall Street Journal reports. The unit hopes to nearly halve its 37% stake in the U.K.'s Yorkshire Water.

The move to sell follows an apparently failed effort by CII's leaders to raise money from investors to facilitate the unit's spin-off. Citi has already spun-off or sold a number of alternative investments businesses, including most of Citi Capital Advisors' hedge fund unit, which earlier this year became Napier Park Global Capital.

"Following a decision by Citigroup in 2012 to exit the remaining businesses of Citigroup Alternative Investments, the CII Partners plan to spin out a new investment management business," CII co-head Felicity Gates and partners Colin Campbell, John-George Duthie-Jackson and Ghislain Gauthier said. The group still hopes to acquire some of CII's assets, writing that "Citigroup has indicated to the CII Partners that finding a suitable sponsor is a prerequisite to Citigroup considering transferring any of the existing CII asset to management."

The memorandum sought interest for a 25% stake in the fund.

Gates, Duthie-Jackson and Campbell have all left Citi, Financial News reports. Gauthier, CII's chief investment officer, remains at the firm for now, leaving co-head Holly Koeppel to manage the fund's liquidation.

"Citi has taken steps to position [CII] to meet its core asset-management mandate and will continue to manage investments to provide long-term value for its investors," a Citi spokeswoman told the Journal.

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