Sale of Citigroup
Arab Based Investment Authority Buys Stake in Citigroup
Citigroup Inc., in an attempt to recover losses after getting hit hard by the sub prime mortgage fiasco, announced in late November 2007 that it has sold a $7.5 billion stake to the investment arm of the Abu Dhabi government. As part of the deal, the Abu Dhabi Investment Authority's (ADIA) aggregate ownership in Citigroup's common shares will total no more than 4.9% of Citi's total shares outstanding. The purchase would make the sovereign investment fund "Investment Authority" one of Citigroup's largest shareholders.
A "sovereign investment fund" is an investment fund created or controlled by a government, usually of a country with trade surpluses and abundant foreign monetary reserves. Those funds might buy foreign assets, and among them company's stocks, which can create political controversy in the "recipient" countries. According to some industry analysts, the Investment Authority is believed to be the largest sovereign wealth fund, controlling hundreds of billions of dollars. According to the investment Authority's director, Sheikh Ahmed Bin Zayed Al Nahayan, the investment is a reflection of their confidence in the company's ability to build shareholder value, adding "We see Citigroup as a highly respected company with a premier brand and with tremendous opportunities for growth".
The nation's largest bank, Citigroup recently has been plagued with financial and management issues due to big losses from mortgages and other investment issues. Although the infusion of large sums of capital cannot be expected to solve Citi's financial crisis immediately, investors seem to be happy with the steps taken at this point but only time will tell.
Author Kristy Welsh has a background in the mortgage industry, and six years credit experience as Webmaster for creditinfocenter.com. Her newly released book, Good Credit is Sexy, from www.creditinfocenter.com. In 263 pages, the book explains different forms of credit, how to use credit wisely and how to keep your credit attractive to lenders.