Citi to raise $3bn for PE and hedge units

Source: AltAssets

US financial services conglomerate Citigroup is planning to raise over $3bn for its private equity and hedge funds, according to Bloomberg.

In spite of looming US regulations that may prohibit banks from dealing in alternative investment asset classes, Citi may seek to raise $1.5bn for private equity and $750m for hedge funds this year. An additional $1bn may be targeted for hedge funds next year.

Although regulators are convening in Washington to unify the House and Senate bills on Wall Street regulation, Citi is to press ahead with plans to raise capital for their in-house management teams.

The possible regulation could bar banks from investing in private equity, as well as prohibit them from raising their own funds, or trading in stocks, bonds or commodities on their own account.

Even if the rules are passed, it could take up to six years to fully implement them, giving Citi and other banks some breathing space. However, the bank has started to reduce its exposure to alternative asset classes, selling off a $12.5bn real estate fund and a $4.2bn hedge fund of funds last year.

Citi currently has around $5bn of its own cash in its Citi Capital Advisors alternatives arm, formerly known as Citi Alternative Investments before the crash led to $80bn worth of funds being shuttered or frozen, leading to $3bn of losses for the bank.