Citigroup and hedge funds. The US uber-bank can’t decide whether it wants to get into bed with the industry – or hide under it, for fear that it starts asking awkward questions about how the component parts of the world’s biggest financial services company fit together.
Today is a day for the former. Citi has said it will buy Bisys Group, a hedge fund administrator, for $1.45bn in cash, plus the $20m of final dividend – after shedding the retirement and insurance services units to private equity group JC Flowers, the net cost of the deal for Citi comes out at $800m.
That leaves the bank with the investment services business of Bisys, which provides administration for mutual funds, hedge funds and private equity. Its alternative investment group has more than 480 clients with over 1,500 funds.
Shares in Bisys jumped more than 4 per cent on Wednesday in pre-market from their $11.47 close. The Citi deal values the company at $11.85 a share.