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Private Equity | 5 September 2013

Citigroup Sells Its PE Arm CVCI To Rohatyn Group

by Pranali Shah
Citigroup Sells Its PE Arm CVCI To Rohatyn Group
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Citigroup Inc is selling a $4.3 Bn PE fund, known as Citi Venture Capital International, for an undisclosed price to investment firm Rohatyn Group, ET states. The sale is part of one of the world's largest bank to comply with the Volcker Rule mandating banks to exit their alternative investments.

The Volcker Rule in 2011, part of Dodd-Frank Law disallows the bank's alternative investments through PE and hedge funds.

Founded by Nicolas Rohatyn in 2002, the Rohatyn Group or TRG,has presence in India through its 50% stake in ARCH Capital Management and ARCH Capital Asian Partners which it had acquired in 2011 that primarily invests in real estate developers. The Rohatyn Group's buyout of PE fund CVCI will help the $6 Bn fund to access more than two dozen India investments worth around a billion.

In 2012, TRG acquired a 60% stake in CapAsia, a Singapore-based mid-market infrastructure private equity firm focused exclusively on non-BRIC Emerging Asia.

The new firm will operate as TRG and would invest in emerging markets through a $6 Bn PE fund and a $1.2 Bn liquid market investments fund. TRG’s funds will include private equity, real estate, infrastructure, renewable energy, hedge funds, fixed income, and inflation-linked bonds.

Also, JP Morgan sold its $4.5 Bn private equity business in June this year to One Equity Partners, to meet with requirements of Volcker rule. Earlier Bank of America sold its $5 Bn North Cove Partners and $1.4 Bn Ridgemont Equity Partners. Goldman Sachs too is looking at shutting down its PE business globally.

Founded in 2001 and part of Citi's alternative asset management platform Citi Capital Advisors, CVCI operates exclusively in emerging markets with a local presence in Singapore, Hong Kong, Mumbai, New Delhi, London, New York and Santiago

After the recent deals, Citi Capital Advisors, which manages hedge-fund and private-equity assets, will have only one fund -- the $2.5 billion North American private equity fund Metalmark Capital. The bank is trying to sell that fund to its management

CVCI has been investing in India since 2004. Some of its marquee investments in India include, Cox & Kings, Janalakhsmi Financial Services, KS Oils, Suzlon Energy, Unimark Remedies, Himadri Chemicals, Eleder Pharma and Shiv Vani Oils.

CVCI was also planning to buy a majority stake in India’s Sansera Engineering for about $56 Mn. It was also looking for an exit if Polaris Financial Technology demerges its service business. It also invested in the Company as a new equity partner with HOVS LLC ('HandsOn') in March.

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