Citi (C) confirmed Friday it's buying former Morgan Stanley (MS) hard hitter Vikram Pandit's hedge fund and putting Pandit in charge of its alternative investments business.

The news comes just days after published reports surfaced that Citi was considering a purchase of the fund, called Old Lane Partners. Terms weren't disclosed, though earlier reports put the price in the range of $600 million to $800 million.

Pandit and John Havens will join Citi's management committee. They join just two days after Citi set plans to cut 17,000 jobs and move 9,500 other posts to lower-cost locations.

The transaction, which is subject to customary regulatory reviews, is expected to close in the third quarter of this year. Subject to performance, it could be slightly dilutive to Citi's earnings per share in the first year or two, due largely to accounting treatment, and accretive thereafter.

"Old Lane fulfills CAI's goal of enhancing its presence across all major asset classes for the benefit of its institutional investors, our Markets and Banking, Smith Barney, and Private Banking clients," said CEO Chuck Prince. "The result will be a powerful combination of tremendous talent and a formidable platform, with $59 billion in assets, exciting growth potential and the ability to attract additional world-class talent."

Shares fell 4 cents to $51.61.

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