French firm AXA Private Equity has acquired a $1.7bn sheaf of private equity assets from US investment bank Citigroup in one of the largest secondary transactions of all time.
Driven by US regulatory pressure for banks to offload alternative and non-core assets, the portfolio is made up of 207 limited partnership interests in private equity buy-out funds and some direct stakes in companies.
The deal follows AXA Private Equity’s acquisition of a $1.9bn private equity portfolio from Bank of America Merrill Lynch in April 2010.
Citi Holdings COO Mark Mason said, “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.
“Citi remains focused on directing resources to our core franchise to generate long-term growth opportunities,” he added.
Large US banks are facing prohibition from investing in private equity or hedge funds and pressure to build up their capital reserves, as part of a series of measures aimed at preventing the excessive risk-taking that led to the financial crisis.
Other divestments include Bank of America Merrill Lynch’s (BAML) Asian private equity portfolio to a consortium of four buy-out houses, led by Paul Capital, the sale of $4bn-worth of private equity fund of funds, mezzanine, feeder, and co-investment funds from Citigroup to StepStone Group, and another set of Citi assets to Lexington Partners.
Earlier this week, BAML spun out another of its private equity arms, which is to be known as North Cove Partners, following the hive off of another division, Banc of America Capital Investors, last year. The unit is now operating as Ridgemont Partners.
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