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Citigroup will integrate Old Lane hedge fund into its banking & securities business


Date: Monday, June 16, 2008
Author: Associated Press

NEW YORK (AP) - Citigroup Inc. on Thursday said it will close a hedge fund co-founded by Chief Executive Vikram Pandit, just 11 months after the global bank acquired it for more than $800 million.

Old Lane Partners, which has had sluggish returns as global markets skidded due to the credit crisis, will allow investors to cash in their holdings by July 31. Citigroup said that some of the fund's investments including equities and fixed-income products would be integrated into the bank's securities and banking division.

Citigroup said integrating Old Lane will increase Citi's assets by $9 billion. All former Old Lane partners, including Pandit, will be required to maintain their investments in the funds.

With lackluster performance, Citigroup executives have been faced with a choice to inject more cash into the hedge fund or unwind it. Pandit, given his involvement with Old Lane, was not involved in discussions about what to do with the hedge fund, according to a report from The Wall Street Journal.

Citigroup said after being integrated into the bank, Old Lane will establish a number of funds and other offerings for its alternative investments business.

A Citi spokesman was not immediately available to comment.

Citi shares rose 1.7 percent to $19.53 in premarket trading from a $19.21 close Wednesday.