Citi profits hurt by private equity performance

Oct 18, 2010

Citigroup (c) today bested analyst expectations by reporting $2.15 billion in Q3 net income. For context, the mega-bank lost $3.24 billion during the same period in 2009.

One dark cloud, however, was a negative $8 million mark in its brokerage and asset management business (compared to a positive $141 million in Q2 2010). Citi said the drop “was mainly due to mark-downs on private equity investments.”

You might recall that Citi sold around $1 billion in private equity interests this past summer to Lexington Partners, which represented approximately one-third of Citi’s private equity assets. Since then, I’ve been hearing rumors that Citi has engaged in informal talks to sell a bunch more of its portfolio, which is said to include a bunch of mega-fund positions.

Got to wonder if the earnings drag makes Citi a motivated seller, or if it slows down until portfolio valuations rebound…

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