Sovereign Wealth Fund Institute

The Abu Dhabi Investment Authority (ADIA) invested in Citigroup during the subprime crisis. In November 2007, ADIA agreed to invest US$ 7.5 billion into Citigroup. Recently, ADIA ended up converting their final tranche of equity units into 5.9 million shares of common stock. With all this being said, this is another occurrence for sovereign wealth funds to be keenly aware of bank bailouts during times of crisis.

Based on Citigroup’s filing, “On October 14, 2011, an arbitration panel issued a final award and statement of reasons finding in favor of Citigroup on all claims asserted by the Abu Dhabi Investment Authority (ADIA) in connection with its $7.5 billion investment in Citigroup.”

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November 2007, ADIA received equity units that are to convert into Citigroup common shares at a price of $31.83 per share between March 2010 and September 2011. Citigroup’s share price was $3.20 at on 12/17/2009. ADIA wants to pull out of the deal or will seek over $4 Billion in damages. More details about the claim were not made public.

An ADIA spokesman said: ‘It is the policy of ADIA to pursue its legal rights fully. ADIA declines to comment further due to binding confidentiality obligations, which ADIA intends to respect.’

Citigroup said in a statement, “New York – On December 15, 2009, an arbitration claim was filed against Citi in New York by the Abu Dhabi Investment Authority (ADIA), which purchased equity units from the company in November 2007. The units obligate ADIA to purchase a total of $7.5 billion of common equity on specified dates in 2010 and 2011. The arbitration claim alleges fraudulent misrepresentations in connection with the sale and seeks rescission of the investment agreement or damages in excess of $4 billion. Citi believes the allegations are entirely without merit and intends to defend against them vigorously.”

read more: Citigroup Press Release

Kuwait’s Sovereign wealth fund has made a profit of $1.1 billion (€739 million) after selling its 5 per cent stake in Citigroup for $4.1 billion less than two years after acquiring preference shares in the largest US bank during the global financial crisis.

Kuwait Investment Authority (KIA) converted preferred stock in Citigroup that it purchased for $3 billion last year into common shares and sold them, earning a 37 per cent return on its investment. The sale comes as Citigroup is set to intensify efforts to break free from US government emergency bank funding programmes.

Citigroup is racing against the clock to convince US authorities that it be allowed to repay $20 billion of bail-out funds, with insiders and regulators arguing that unless the bank acts within the next 10 days it will have to wait for more than a month.

read more: Irish Times

GIC, a sovereign wealth fund of Singapore, said Tuesday that its investments fell more than 20 percent in the year that ended in March, but recovered more than half that loss during the rally on financial markets since then.G.L.C., or the Government of Singapore Investment Corp., the larger of the city-state’s two wealth funds, said it had increased exposure to alternative investments like real estate and natural resources but was bearish on bonds. The fund said its managers were optimistic about emerging markets and Asia.

The fund’s portfolio shrank by more than a fifth in the year that ended March 31, but it has ridden the financial meltdown better than its sister fund Temasek by paring its exposure to equities before the crisis and through a well-timed sale of part of its Citigroup holding. G.I.C., headed by Lee Kuan Yew, the former prime minister, is the largest sovereign fund in the world after those of Abu Dhabi, Saudi Arabia and Norway, according to Deutsche Bank. The fund says it manages more than $100 billion; analysts estimate the figure at $200 billion to $300 billion.

read more: The New York Times

Reuters reports that, “the Government of Singapore Investment Corp (GIC) said on Tuesday it plans to continue holding its stakes in Citigroup and UBS.

‘GIC is a long-term investor and will continue with its investments in Citigroup and UBS,’ a GIC spokeswoman told Reuters.

Some analysts had expressed concerns GIC and other sovereign funds might follow in the footsteps of Temasek, which sold off its 3 percent stake in Bank of America in the first quarter to realise a hefty loss of at least $3 billion.”

read more: Reuters

According to Reuters, “Kuwait’s finance minister expressed confidence in the Gulf Arab state’s sovereign wealth fund investment in U.S. bank Citigroup, saying in remarks published on Tuesday that it could turn profitable.

‘Our investment in Citi… is beneficial… and God willing we will reach a stage where it becomes profitable,’ Mustapha al-Shamali told al-Rai newspaper.

The Kuwait Investment Authority (KIA), which manages state assets in the world’s fourth-biggest oil exporter, has come under fire from some parliamentarians for investing $5 billion last year in U.S. banks Citigroup and Merrill Lynch has since been bought by Bank of America.”

read more: Reuters

Abu Dhabi is assessing its $7.5 billion investment in Citigroup as the bank’s problems deepen and consequences of a possible nationalization become clearer, according to sources close to the Abu Dhabi Investment Authority (ADIA). ADIA invested $7.5 billon last year in Citi through convertible bonds that pay 11 percent in interest, but it must start converting the bonds into 235.6 million shares in Citigroup from March next year. “Nothing has changed from ADIA’s perspective at this point. ADIA’s convertible bonds are due for conversion in a phased manner between March 2010 and September 2011, and that stands,” an Abu Dhabi government official told Reuters.

read more: Reuters

Reuters reports that, “The Kuwait Investment Authority (KIA), the Gulf Arab state’s sovereign wealth fund, has reduced exposure to global stock markets since October, shifting assets instead into short-term cash funds, a government report said. In a briefing to parliament, the government said KIA had cut the ratio of international share investments in a key fund in a bid to minimize the effect of the global financial crisis on Kuwait, the world’s seventh-largest oil exporter, according to a copy of the report obtained by Reuters on Sunday. The news comes after KIA, which manages Kuwait’s substantial oil-generated assets, last year burned its fingers by buying into U.S. banks such as Citigroup and Merrill Lynch before both stocks nosedived and the latter filed for bankruptcy protection.

Kuwait Investment Authority, which like other sovereign wealth funds does not disclose its investment policy, had come under fire in parliament for making those investments.”

read more: Reuters

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Bischoff (Citigroup)

MarketWatch is reporting that, “State investment funds from China and Russia are the main concern in the growing debate over whether to regulate so-called sovereign wealth funds, the chairman of Citigroup Inc., Win Bischoff, said Tuesday.”