Citigroup sells private equity assets to AXA for $1.7 billion

NEW YORK ― Citigroup has agreed to sell a portfolio of private equity assets to AXA Private Equity for $1.7 billion, the French insurer said on Wednesday, the latest move by the U.S. bank to unload non-core assets.

For AXA Private Equity, the deal is part of a series of acquisitions of private equity investments originally owned by other investors, including the purchase of a $1.9 billion portfolio from Bank of America in April 2010.

AXA and other funds who have been buying private equity portfolios on the secondary market are betting that such assets ― which have begun to recover since the 2008 financial crisis ― will appreciate further and that they can extract more value from them.

A total of 207 stakes comprise the Citigroup portfolio in various buyout funds as well as some direct stakes in companies, AXA said, adding that Citi ― which has been looking to focus on its core businesses ― was financing the purchase.

“This sale marks the completion of a significant share of Citi Holdings’ proprietary private equity investments and demonstrates the progress the Citi Holdings team is making in reducing non-core assets on our balance sheet,” said Mark Mason, chief operating officer of Citi Holdings, which groups the U.S. bank’s non-core holdings.

The portfolio, which AXA called “some of the best-managed funds offering strong potential in terms of value creation,” does not include private equity funds which Citigroup manages or previously managed.

It includes direct stakes in 18 companies including First Data, controlled by private equity firm KKR & Co. and TXU Energy, owned by KKR and TPG Capital LP, as well as stakes in funds managed by KKR, Blackstone, Carlyle, Clayton, Dubilier & Rice and Providence Equity Partners.

Last year, Citigroup sold a portfolio of private equity interests worth about $1 billion to Lexington Partners.

Banks on both sides of the Atlantic have been offloading private equity assets they built up before the financial crisis as they seek to shrink their balance sheets and focus on their core retail and investment banking businesses.

Bailed out lender Lloyds Banking Group, for example, agreed to sell its private equity business last July to buyout firm Coller Capital in a deal valuing the portfolio at 480 million pounds ($786.2 million).