Citi Looks for Liquidity

Imagine you’re a bulge-bracket bank in need of liquidity. Actually, that qualifier might be redundant, so just imagine you’re a bulge-bracket bank. You’ve already done a big write-off, fired your CEO, secured billions of dollars from a sovereign wealth fund and announced thousands of layoffs. What’s your next move?

For Citi, one answer is to sell off approximately $1.4 billion of private equity interests.

The bank is in serious talks to sell off two portfolios, according to multiple sources. The first is around $1 billion of direct investments made by Nikko Cordial, the Japanese brokerage that Citi officially absorbed yesterday.

Second, Citi is planning to unload its legacy interests in CVC Equity Partners, which spun out in 2006 as an independent buyout firm called Court Square Capital Partners. Citi did not invest in the first independent Court Square fund (Court Square II), but still holds around $400 million in older stakes.

Both deals have been in the secondary market for more than a month, but I’m not yet sure who’s leading the Nikko Cordial bidding (if anyone). The CVC Equity Partners stake, however, is likely to be acquired by AlpInvest Partners and Goldman Sachs – which both happen to be limited partners in Court Square II.

“No comment” from any of the relevant parties.