Citigroup has announced that it will sell a $7.5-billion stake to a Middle Eastern sovereign fund in the latest bid to shore up its precariously low capital base.
The fund, the Abu Dhabi Investment Authority, has agreed to buy a 4.9 percent equity stake in a complex transaction that has been approved by U.S. regulators. It will have no role in the management or governance of Citigroup, nor any presence on Citigroup's board. The deal was announced Monday in New York.
Abu Dhabi's 4.9 percent stake means that nearly 10 percent of Citigroup will be controlled by Middle Eastern investors. Prince Walid bin Talal of Saudi Arabia already owns a roughly 5 percent stake after bailing out the company in the early 1990s.
"This investment reflects our confidence in Citi's potential to build shareholder value," said the fund's managing director, Sheikh Ahmed bin Zayed al-Nahyan.
The investment from Abu Dhabi underscores Citigroup's precarious capital position, and also highlights the growing petrodollar wealth of Mideast countries, which are buying up assets and taking stakes in numerous American companies.
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