NEW YORK (
agreed to another divestiture on Wednesday as it continues to chip away at its so-called "bad bank" assets.
The company's Citi Alternative Investments unit has reached a deal to sell a number of hedge fund-related businesses to New York-based SkyBridge Capital. The transaction, which includes hedge fund of funds, fund seeding and advisory operations, involves total investments $4.2 billion. Financial terms weren't disclosed.
The move follows comments earlier this week from Citigroup CEO Vikram Pandit about the company's goal of
bringing its balance sheet down 40%
from a peak level of $2.36 trillion in the third quarter of 2007. At the end of fiscal 2009, the company was a little more than 20% to that goal with assets of $1.86 trillion, leaving it needing to pare away another $446 billion or so.
The hedge fund assets were part of Citi Holdings, which the company set up during the financial crisis to house a hodgepodge of assets that it had either determined were non-core, given its strategic plan to sharpen its focus on global consumer banking and institutional clients businesses, or toxic.
The company has brought Citi Holdings' assets down almost 40% to $547 billion at the end of fiscal 2009 from $898 billion at the end of the first quarter of fiscal 2008, and those efforts started to pay off for shareholders in March when the stock began to rally in earnest.
Through Tuesday's close, the shares were up 40% in 2010, and they were rising another 3.3% to $4.77 on Wednesday along with the rest of the bank stocks following a strong first-quarter earnings report from
. Volume of 318 million was tops on the New York Stock Exchange.
The next big test for Citigroup will be its own first-quarter report, which is slated for Monday. Wall Street is expecting a slight loss for the March period, breakeven on a per share basis, with revenue projected at around $20.8 billion. The other looming issue for the company is the government's plans to divest its 27% stake over the course of the rest of the year.
The Treasury's investment is a leftover from the $45 billion in bailout funds that Citigroup received, and it's expected to exit the stock, which it holds at a value of $3.25 per share, through a combination of block sales and open-market transactions, although the government has said it will provide a "pre-arranged written trading plan" for disposing of the stake.
Written by Michael Baron in New York