Citigroup Inc. is selling a 4.9% stake to the Abu Dhabi Investment Authority, the sovereign wealth fund of the government of Abu Dhabi, in a transaction valued at $7.5 billion.
The new capital will help Citigroup rebound from $8 billion to $11 billion in write-downs due to the sub-prime mortgage-related securities since Sept. 30. (InvestmentNews, Nov. 5) .
Those write-downs led to the resignation of chairman and chief executive Charles O. Prince.
The Abu Dhabi Investment Authority will receive convertible stock in Citigroup that must be converted into common stock at a price of $31.83 to $37.24 per share between March 2010 and September 2011.
The investment is expected to close within the next several days.
"This investment also enables us to access capital in an efficient manner, and is consistent with our strategy of maintaining a balance sheet that benefits from highly diverse sources of funding in terms of both geography and type of security," said Win Bischoff, Citigroup's acting chief executive, according to a statement.