Kuwait fund makes $1.1 billion through Citigroup stake sale
07 Dec 2009
Kuwait Investment Authority (KIA), the country's sovereign wealth fund said yesterday that it has sold its stake in US banking giant Citigroup Inc for $4.1 billion.
The Citigroup preference shares were acquired for $3 billion in 2008 following the global financial crisis triggered by sub-prime lending in the US. The stake sale yielded a gain of $1.1 billion or 37 per cent return on the initial investment.
KIA has not disclosed the number of shares it sold or what it plans to do with the sale proceeds. Some analysts believe that the reason for the stake sale could be the improved market conditions.
New York-based Citigroup, the global banking giant was on the verge of collapse following the sub-prime mortgage crisis last year. The troubled banker was subsequently rescued by a massive US bailout and funds from the Middle East and Singapore.
The US government injected $45 billion and provided guarantees to the $306 billion of Citigroup's toxic assets.
KIA, the world's first sovereign wealth which was founded in 1953 to manage the surplus funds of the Kuwaiti Government following the gulf oil boom, manages Kuwait General Reserve Fund and Kuwait Future Generations Fund and its total assets are estimated at over $200 billion.
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