Plenty of private equity groups have spun out of investment banks.
Now, a private equity group that previously spun out and operated independently for several years has moved back in with a new Wall Street parent.
Metalmark Capital Partners announced last week that it has agreed to be acquired by Citigroup Inc. for an undisclosed price. Metalmark said it would become part of Citi’s alternative investments group, Citi Alternative Investments, which manages capital on behalf of Citi, as well as third-party institutional and high net-worth investors.
Metalmark is expected to raise a new $3 billion fund after it joins Citi, with the New York bank supplying most of the capital, according to a report on CNN.com.
The sale of Metalmark comes just three years after the firm gained its independence from Morgan Stanley, where it was known as Morgan Stanley Capital Partners.
In a statement, the middle-market firm said: “Metalmark believes that alignment with Citi will provide it with all of the benefits of being part of a larger institution, while allowing the Metalmark team to maintain the operational control, discipline and autonomous decision-making that exists today.”
The purchase of Metalmark, which focuses on middle-market deals, marks the latest effort by Citi to expand its alternative investment group. Earlier this year, it acquired Carlton Hill Global Capital, a fixed-income money manager focused on credit derivatives, and hedge fund Old Lane Partners.
In addition to buying Metalmark, Citi named Vikram Pandit, co-founder of Old Lane, to its CEO post.
Metalmark Chairman and CEO Howard Hoffen will serve as a Citi managing director and report to John Havens, the president and CEO of Citi Alternative Investments, according to a report by Reuters.