Business NEWS
Why Kuwait Investment Authority sold $4.1 Billion Citi Stake
By Amarendra Bhushan for CEOWORLD Magazine Updated:December 6, 2009
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Kuwait Investment Authority (KIA) has sold its stake in Citigroup Inc.(NYSE:C), making a profit of $1.1 billion, or a 37 percent return on its initial investment.. Kuwait Investment Authority bought $3 billion worth of preferred shares in Citigroup in January last year.
Kuwait’s sovereign wealth fund, which manages state assets in the world’s fourth-biggest oil exporter, has come under fire from some parliamentarians for investing $5 billion in Citigroup and Merrill Lynch. Merrill Lynch has since been bought by Bank of America (BAC.N).
In November, Gulf neighbor Qatar sold half its Volkswagen preference shares (VOWG_p.DE), cashing in on recent gains and raising around 1.5 billion euros ($2.26 billion) for possible future deals.
The deal, which will come in four stages starting in March next year, is the culmination of an agreement between ADIA and Citigroup that was aimed at providing fresh capital for the bank.
Some members of Kuwait’s parliament criticised the KIA for its investment in Citigroup and Merrill Lynch as the financial crisis dragged shares in both banks lower.
Arab nations’ sovereign wealth funds in the Gulf region have been heavy investors in U.S. and European shares, using their oil wealth to buy stakes in companies like Citigroup, Germany’s Volkswagen AG and Mercedes-Benz parent Daimler AG.
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