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ADIA to buy $7.5bn Citi stake27/11/2007. Source: AltAssets. 
 Abu Dhabi Investment Authority, the sovereign wealth fund of the government of Abu Dhabi, has agreed to acquire $7.5bn of equity units, with mandatory conversion into common shares in financial services firm Citi. Over the past few months Citi suffered from significant looses as a result of the credit crunch. Its CEO Charles Prince resigned earlier this month.
Each equity unit is mandatorily convertible into Citi shares at prices ranging from $31.83 to $37.24 per share. The equity units convert to Citi common shares on dates ranging from 15 March 2010 to 15 September 2011, subject to adjustment. Each equity unit will pay a fixed annual payment rate of 11 per cent. ADIA will reportedly become Citi's largest shareholder.
Under the terms of the agreement, ADIA's aggregate ownership in Citi's common shares, including the conversion of the equity units, will not total more than 4.9 per cent of Citi's total outstanding shares.
Win Bischoff, Citi's acting CEO, commented, 'This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business.
'This investment also enables us to access capital in an efficient manner, and is consistent with our strategy of maintaining a balance sheet that benefits from highly diverse sources of funding in terms of both geography and type of security,' Bischoff added.
ADIA will have no special rights of ownership or control and no role in the management or governance of Citi.
The deal is the latest of a series of recent investments by Arab sovereign wealth funds in US finance and private equity firms. Earlier this month private equity firm Apollo Management confirmed it had sold a nine per cent stake to ADIA.
In September Abu Dhabi government-owned strategic investment and development company Mubadala agreed to buy a 7.5 per cent stake in private equity giant The Carlyle Group for $1.35bn.
Copyright © 2007 AltAssets
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