Citigroup says it is selling more than $6 billion in private equity and hedge fund assets to comply with impending bank regulations.
The company said Tuesday it sold its Citi Venture Capital International business to The Rohatyn Group and also sold an emerging markets hedge fund. It did not disclose terms of the two sales. Citi Venture Capital has $4.3 billion in assets under management, and the Emerging Markets Special Opportunities Fund had $1.9 billion in managed assets.
According to a memo sent to employees on Monday, Citgroup Inc. said it was selling the Citi Venture Capital assets to comply with the Volcker Rule, which limits banks' ability to make trades for their own profit and restricts their investments in hedge funds and private equity funds. The rule is a provision of a 2010 financial overhaul law, and it could go into effect in 2014.
Regulators hope it will limit the kind of risky trading by banks that contributed to the financial crisis and forced taxpayers to bail out the institutions.
Citigroup said Rohatyn Group and Citi Venture Capital will combine into a company called TRG. TRG will have $7 billion in total assets, with $6 billion in private equity and $1.2 billion in liquid market strategies. That deal is expected to close during the fourth quarter.
The Wall Street Journal reported Tuesday that Citigroup also plans to sell Metalmark Capital, a North American private equity fund with $2.5 billion in assets. Citigroup declined to comment.
Shares of Citigroup rose 76 cents to $49.09 in afternoon trading.
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