Abu Dhabi Fund to Rescue Citi Bank....$7.5 Bil for 4.9 % Stake

Citi Sells Stake to Abu Dhabi Fund
Tuesday November 27, 7:42 am ET
By Joseph Altman, AP Business Writer

Abu Dhabi's Sovereign Fund Agrees to Invest $7.5 Billion for a 4.9 Percent Stake in Citigroup


Analysts believe the Investment Authority is the world's largest sovereign wealth fund, although the fund has never publicly revealed its total assets. Analysts estimate the fund controls hundreds of billions of dollars, with some experts saying the amount could be approaching nearly a trillion dollars.

Sovereign funds throughout the Middle East have been building up overseas investments recently, much of it on the back of oil prices that have risen more than 60 percent this year, bringing record cash flow to the region. China and Russia also have considerable funds they are sending overseas.

Unlike its counterparts in Dubai, the Investment Authority provides very little information about its investments, with analysts saying it appears to regularly purchases less than 5 percent of the companies it targets to avoid having to disclose the investments.

Dubai International Capital, which is owned by the ruler of that booming Persian Gulf city-state, announced earlier Monday that it has acquired a stake of undisclosed size in the Japanese electronics and media company Sony Corp. Its other investments this year included acquiring a 3.12 percent of European Aeronautic Defence & Space Co., which builds Airbus commercial planes and military aircraft. The firm also holds stakes in Daimler AG and British bank HSBC Holdings PLC.

Many companies have welcomed such investments because the funds tend to be stable investors, but some U.S. officials have expressed concern that their acquisitions could target sensitive industries with links to national security.

Abu Dhabi's move recalls the early 1990s investment in Citi made by Saudi Prince Alwaleed bin Talal. After the bank made some losing bets on U.S. real estate and Latin America, Alwaleed bought a stake for less than $600 million that has since ballooned into billions.

The Abu Dhabi investment comes at a time when Citi is trying to reassure investors amid heavy credit-related losses and a search for a new CEO.

"This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business," Win Bischoff, acting chief executive, said in a statement.

"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," Bischoff said.

Associated Press Writer Sebastian Abbot contributed to this report from Cairo
http://biz.yahoo.com/ap/071127/citigroup_abu_dhabi.html

I was going to post about this, but saw you already had.

This is becoming an increasingly alarming trend: http://en.wikipedia.org/wiki/Sovereign_wealth_funds

Some great articles: http://news.google.com/news?hl=en&ned=&q=sovereign+wealth+fund&ie=UTF-8&scoring=n

- Dave