Citigroup Inc. (C), the third-biggest U.S. bank by assets, sold its Metalmark Capital private-equity unit to comply with the Volcker Rule.
Metalmark will no longer be an affiliate of Citigroup, the New York-based firms said yesterday in a statement. Citigroup will keep limited-partner interests in the Metalmark Capital Partners II fund, according to the statement. Terms weren't disclosed.
Citigroup Chief Executive Officer Michael Corbat, 53, is among U.S. bank chiefs grappling with the Volcker Rule, which was formally adopted by regulators this month and seeks to stop lenders with federally insured deposits from making bets with shareholder cash. The rule keeps banks from investing more than 3 percent of Tier 1 capital in hedge or private-equity funds or owning more than 3 percent of the fund.
"We thank Citi for their partnership," Howard Hoffen, 50, Metalmark's chairman and CEO, said in the statement. "We look forward to continuing our long-term relationship with them as we work to deliver value to our investors."
Metalmark, which has $2.5 billion of committed capital in its latest fund, focuses investments in companies in the energy and natural resources, industrials and health-care industries, according to its website. The unit was housed in the Citi Capital Advisors division, which the bank has largely dismantled.
Citigroup spun out an internal hedge-fund unit earlier this year with about $6.8 billion in holdings under management, and renamed it Napier Park Global Capital. The lender sold its Citi Venture Capital International unit, or CVCI, to Rohatyn Group earlier this year.
Metalmark was created in 2004 by the former principals of Morgan Stanley Capital Partners, according to its website. It will be managed by the same investment team, according to the statement.