Kuwait sells Citigroup stake for $4.1 billion
DUBAI, United Arab Emirates — Kuwait's sovereign wealth fund said Sunday it booked a profit of $1.1 billion by selling the stake it took in Citigroup Inc. less than two years ago when the banking giant was strapped for cash.
The Kuwait Investment Authority said in a statement it sold the preferred shares after converting them to common stock for $4.1 billion. That works out to a gain of nearly 37 percent on its $3 billion investment.
Calls to the Kuwait fund for further details went unanswered. A Citi spokesman declined to comment.
Gulf Arab nations' sovereign wealth funds have been heavy investors in U.S. and European companies, using their oil wealth to buy large stakes in companies ranging from Citi to Germany's Volkswagen AG and Mercedes-Benz parent Daimler AG.
The KIA joined other big investors — including the Government of Singapore Investment Corp. and longtime shareholder Prince Alwaleed bin Talal of Saudi Arabia — in pumping some $12.5 billion into Citi in January 2008. At the time, the bank was reeling from a huge drop in the value of its mortgage holdings.
At the same time it made its Citi investment, the fund took a $2 billion stake in Merrill Lynch, which also needed cash as a result of the credit crisis.
Merrill was later bought by Bank of America Corp., which last week surprised investors by paying back $45 billion in federal bailout money.
Analysts say that move puts pressure on Citi and other banks that tapped U.S. government aid to follow suit, even though they still could face further losses as consumers struggle to pay their bills.
In September, the KIA said it had no intention of selling its holdings in either Citi or Bank of America in the short term because its investment policies are based "on a long-term vision."
Kuwait took its stake in Citi last year after another Gulf fund, the Abu Dhabi Investment Authority, paid $7.5 billion for a 4.9 percent stake in the company. ADIA's holdings, known as "equity units," will begin to convert into ordinary shares starting in March next year.
A spokesman for the Abu Dhabi sovereign wealth fund, the world's largest, declined to comment on plans for its Citi stake.
AP Business Writer Tarek El-Tablawy contributed reporting from Cairo.
Source: The Associated Press
« Back to Business News
Related News
-
Dubai World in Debt Talks on $26 Billion, Rest Stable Dec 6, 2009 @ 03:15 AM
Dec. 1 (Bloomberg) -- Dubai World began talks with banks torestructure $26 billion of debt, including $3.5 billion owed byproperty unit Nakheel, and said the remainder of its liabilitiesare on “a stable financial footing.”
-
Citigroup sells stake in Japanese call center Dec 6, 2009 @ 03:15 AM
NEW YORK — Citigroup is selling its controlling stake in Japan's leading call center operator, Bellsystem24, to private equity firm Bain Capital Partners in a deal that values the operation at $1.1 billion.
-
AIG Sells Taiwan Unit to Primus for $2.15 Billion Dec 6, 2009 @ 03:15 AM
Oct. 13 (Bloomberg) -- American International Group Inc.agreed to sell its Taiwan life insurance unit to a group led byPrimus Financial Holdings Ltd. for $2.15 billion, the biggestdivestment since the U.S. insurer’s 2008 government bailout.
-
AIG Sells Taiwan Life Insurance Unit to Primus Financial for $2.15 Billion Dec 6, 2009 @ 03:15 AM
Oct. 13 (Bloomberg) -- American International Group Inc.agreed to sell its Taiwan life insurance unit to a group led byPrimus Financial Holdings Ltd. for $2.15 billion, the biggestdivestment since the U.S. insurer’s 2008 government bailout.
-
China Spurs IPO Revival as Private Equity Sees Boom Dec 6, 2009 @ 03:15 AM
Sept. 21 (Bloomberg) -- Carlyle Group co-founder DavidRubenstein and Stephen Schwarzman, chairman and chief executiveofficer of Blackstone Group LP, are counting on a Chineserevolution -- one being waged by shoppers, not peasants.
