Citi (C) Infrastructure Fund Is Just 15% Owned By Citi


This morning we handily dismissed the notion that Citi’s (C) acquisition of a Spanish highway company for $10 billion was somehow outrageous. It’s not. But if you still aren’t convinced, The Deal has more on the issue:

All signs show that ill-informed investors are less than pleased with the bid as Citigroup’s stock dropped by nearly 15% during Monday trading. Investors are likely fearing the assumption of €5 billion in debt that Citi Infrastructure Partners is willing to incur to make the deal happen. However, Citigroup is not directly exposed to the additional debt because it only owns 15% of the fund, meaning the exposure to any risk is limited. Meanwhile, some falsely believe the U.S. taxpayer is being put on the hook for a deal that doesn’t shore up Citi’s finances in the short term but releases an outflow of €7.9 billion (even though the money is coming from a limited partnership run by Citi, and not the actual bank).

See Also:
Today’s Non-Outrage: Citi Buys Spanish Highway Operator