Bound by regulatory pressure, on Friday,
) announced that it inked a deal with investment firm Lexington
Partners to vend 80% of its limited partnership interest worth $1.5
billion in Metalmark Capital Partners II (MCP II). Following the
announcement of revised business terms between Citigroup and
Metalmark in Dec 2013, Citi will continue to tender 20% of its
limited partnership interest to existing MCP II limited partners.
The terms of the agreement with Lexington, which is anticipated to
close in the fourth quarter of 2014, were not disclosed. Moreover,
the deal awaits certain customary conditions.
Notably, Citigroup purchased the stake in Metalmark in 2007. The
latter invests in middle market companies in the healthcare, energy
and industrials sectors. Metalmark acquired $2.5 billion for
Metalmark Capital Partners II LP, which included Citigroup's
obligation of $1.5 billion.
To abide by the Dodd-Frank Wall Street Reform and Consumer
Protection Act, Citigroup has taken the recent move of dropping its
alternatives holdings in recent years. Notably, in 2013, Citi
Venture Capital International was sold to Rohatyn Group for an
Streamlining of operations and efficiency improvements would aid
Citigroup to accomplish its goals. Shedding of non-core operations
would aid the bank in focusing on core operations, thereby aiding
Recently, Citigroup reported impressive second-quarter 2014
results. Adjusted earnings per share came in at $1.24, outpacing
the Zacks Consensus Estimate of $1.08. However, earnings were below
the year-ago figure by a penny.
Results in the reported quarter were impacted by credit valuation
adjustment (CVA) and debt valuation adjustment (DVA). Moreover,
results included charges worth $3.8 billion ($3.7 billion
after-tax) related to the aforementioned deal. Including these,
Citigroup reported net income of $181 million or 3 cents per share
in the second quarter compared with $4.2 billion or $1.34 per share
in the prior-year quarter.
Following the dismal second-half 2013 performance, Citigroup began
2014 on a positive note and reported impressive results in the
second quarter as well. Though revenues declined, on the whole, its
profit level outpaced expectations.
Citigroup currently carries a Zacks Rank #3 (Hold). Some
better-ranked finance stocks include Huntington Bancshares Inc. (
), PrivateBancorp, Inc. (
) and German American Bancorp Inc. (
). All three carry a Zacks Rank #2 (Buy).
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