Citigroup Inc. is near a deal to sell a portfolio of over $900 million worth of private-equity investments to Lexington Partners Inc., according to people familiar with the situation. The transaction would be one of the biggest ever in the market for secondary private-equity interests.
Lexington, of New York, is among the more prominent players in the niche secondary private-equity market, in which investors buy secondhand interests in private-equity holdings, typically at a discount to their face value.
Citi is trying to offload more than $500 billion in assets to reduce its size by about one-third. It also comes at a time when Congress is weighing new rules that could curb banks' private-equity investments. The deal with Lexington was earlier reported by the blog PE Hub.
Citi would sell private-equity investments to Lexington, including an interest in Citigroup Capital Partners II, a $3.3 billion fund that invested alongside private-equity firms in the large deals struck during the buyout boom. Lexington is expected to pay a slight discount to Citi's holding values in deals such as the discount retailer Dollar General, the lender GMAC LLC and the hospital giant HCA, people familiar with the transaction said. Lexington would buy the underlying assets in the funds, StepStone, a private-equity adviser in La Jolla, Calif., is expected to manage the Citi funds. A StepStone representative declined to comment.