Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

Kuwait's sovereign wealth fund sells Citigroup stake, banks $1.1 billion in profit

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Latest Breaking News Donate to DU
 
Newsjock Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 06:29 PM
Original message
Kuwait's sovereign wealth fund sells Citigroup stake, banks $1.1 billion in profit
Source: Associated Press

DUBAI, United Arab Emirates (AP) -- Kuwait's sovereign wealth fund said Sunday it booked a profit of $1.1 billion by selling the stake it took in Citigroup Inc. less than two years ago when the banking giant was strapped for cash.

The Kuwait Investment Authority said in a statement it sold the preferred shares after converting them to common stock for $4.1 billion. That works out to a gain of nearly 37 percent on its $3 billion investment.

... The Kuwait fund's move came as a surprise. In September, it said it had no intention of selling its holdings in either Citi or Bank of America in the short term because its investment policies are based "on a long-term vision."

Kuwait took its stake in Citi last year after another Gulf fund, the Abu Dhabi Investment Authority, paid $7.5 billion for a 4.9 percent stake in the company. ADIA's holdings, known as "equity units," will begin to convert into ordinary shares starting in March next year.

Read more: http://finance.yahoo.com/news/Kuwait-sells-Citigroup-st...
Printer Friendly | Permalink |  | Top
 
daninthemoon Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 07:07 PM
Response to Original message
1. Thank you once again to both President Bushes.
Printer Friendly | Permalink |  | Top
 
galileoreloaded Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 08:46 PM
Response to Original message
2. The got a "ratchet" when they bought so there was no real reason to do this now...
shit, looks like I better short Citi...
Printer Friendly | Permalink |  | Top
 
aquart Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-06-09 09:17 PM
Response to Original message
3. Kuwait dumped Citi?
Oh, why?
Printer Friendly | Permalink |  | Top
 
Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-07-09 05:20 AM
Response to Reply #3
4. Good timing, huh? Alert City of London management.
Printer Friendly | Permalink |  | Top
 
JCMach1 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-07-09 06:03 AM
Response to Original message
5. Back story on this is that ADIA (Abu Dhabi) is converting its bonds
for stock @ $31 a share (CITI currently hovers around $4).

Could it be that CITI was threatening to default on the bonds? Is Kuwait making this decision based on insider knowledge? You be the judge...


...The Abu Dhabi Investment Authority (ADIA), the countrys largest sovereign wealth fund, is to convert bonds it holds in Citigroup into shares at more than seven times their current value.

The deal, which will come in four stages beginning in March, is the result of a two-year-old agreement between ADIA and Citi that was designed to inject new capital into the US bank, which was then facing liquidity problems.

Under the original agreement, ADIA would have been left with a 4.9 per cent shareholding in Citi, but this has since been diluted by the US government, which took a 36 per cent share in the bank earlier this year, and other investors.

When the deal is completed, ADIA will also have received nearly US$3 billion (Dh11.01bn) from the special dividend Citi agreed to pay in 2007 in return for its original $7.5bn investment. ADIA will receive the last of its shares in September 2011.

ADIA declined to comment yesterday, but a banker based in Dubai who declined to be named said: It looked a good deal at the time but markets moved against them . Who knows, they might move back in their favour.

At the time of the deal, Citi was coming under pressure on global financial markets because of perceived weakness in its levels of capital adequacy.

ADIA agreed to inject $7.5bn into the bank through a convertible bond paying an 11 per cent dividend, significantly above money market rates at the time, but with a commitment to convert the bond at $31.83 a share. Citi shares closed at $4.06 on Friday.... http://www.thenational.ae/apps/pbcs.dll/article?AID=/20...
Printer Friendly | Permalink |  | Top
 
aquart Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-07-09 02:35 PM
Response to Reply #5
6. My guess is that the criminal enterprise that is Citi can't pay.
Printer Friendly | Permalink |  | Top
 
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Wed Dec 13th 2017, 05:46 PM
Response to Original message
Advertisements [?]
 Top

Home » Discuss » Latest Breaking News Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators


Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC