News & Analysis

Citigroup seeks buyers for CVC investments

The US bank has put a total of $570m of investments with buyout firm CVC Capital Partners for sale on the secondaries market, reportedly including $250m of investments in two CVC Asia funds.

-

US bank Citigroup is looking to sell around $570 million of investments with private equity firm CVC Capital Partners on the secondaries market, an industry source confirmed to sister media outlet PEI Asia.

The investments reportedly include about $250 million in two CVC Asia Pacific funds and €15 million in a European fund. The rest of the assets for sale comprise €210 million of investments in more than a dozen European companies in which Citi co-invested in CVC-led deals, according to a Bloomberg report.

Sources told Bloomberg that Citi is selling its stakes in CVC Asia Pacific II, which closed on $1.975 billion in 2005, and CVC Asia Pacific III, which closed on $4.1 billion in April 2008.

Both CVC and Citi declined to comment.

Last week saw Citi complete the transfer of $4 billion of mature private equity assets to StepStone Group in one of the year’s largest secondaries transactions. In the deal, which was first announced in July, Citi handed over its fund of funds, mezzanine funds, feeder funds and co-investment business to the US-headquartered gatekeeper. Citi also sold a portion of its proprietary interests in those funds to Lexington Partners, according to a StepStone statement.

Regulations such as Basel III and the Dodd-Frank Wall Street Reform and Consumer Protection Act in the US are anticipated to prompt many banks to divest their global private equity portfolios and captive private equity arms over the next couple of years, providing potential deal flow to secondaries players.

Founded in 1981 as the private equity arm of Citi Europe, Luxembourg-headquartered CVC Capital Partners span out from its parent in a management buyout in 1993.

In 1999, CVC Asia Pacific was formed under a joint venture between CVC Capital Partners and Citi. The joint venture raised and managed CVC Asia Pacific’s first and second fund. However, CVC Asia Pacific cut ties with its former parent Citi in 2007 for its third fund, terminating the joint venture and making CVC Asia Pacific III independent of Citi.