(Bloomberg) -- Citigroup Inc. will transfer management of a group of in-house private-equity funds to StepStone Group LLC and sell interests in its funds to Lexington Partners Inc. as part of a plan to shrink the bank’s assets.
StepStone, based in La Jolla, California, will take over management of $4 billion in funds-of-funds and buyout co- investments previously run by the Citi Private Equity unit, the New York-based bank said today in a statement. New York-based Lexington will buy Citigroup’s interests in the funds, according to the statement. Terms of the deal, scheduled to close in the fourth quarter, weren’t disclosed.
Citi Private Equity was formed in 2000 and had about $10 billion under management as of January including the firm’s own investments. The unit was among more than two dozen businesses that Chief Executive Officer Vikram Pandit, 53, tagged for sale or shutdown in early 2009.
“Citi will continue to pursue opportunities to divest non- core assets,” the bank said in the statement. The deal will reduce the size of Citigroup’s balance sheet by $1.1 billion. As of March 31, the bank had $2 trillion of assets.
A “significant number” of Citi Private Equity’s employees are expected to join StepStone and Lexington, with some remaining at Citigroup, according to the statement.
Citigroup will retain management of employee investment funds that were managed by Citi Private Equity, according to the statement. The bank also will retain “certain proprietary interests” in the employee funds.
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