A Citigroup fund's $50 million investment in a subprime mortgage company last summer culminated this week in a deal to acquire the failing lender. The deal could wind up costing the fund several times its original cash outlay.

Greenwich Street Capital Partners II, a Citigroup-owned fund, will merge IMC Mortgage Corp. into a subsidiary and hand the troubled subprime lender another $40 million in working capital, IMC said Monday.

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