Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Secret_Agent_Man who wrote (353218)	1/11/2008 6:34:03 PM
From: ldo79	Respond to of 436258

Citi looks to secure further $14bn in new capital By Henny Sender in New York Published: January 11 2008 22:02 \| Last updated: January 11 2008 22:02 Citigroup is putting the final touches on its second major capital-raising effort in as many months, seeking up to $14bn (€9.5bn) from Chinese, Kuwaiti and public market investors, people familiar with the negotiations say. Under the proposal being discussed, the bulk of the money – roughly $9bn – would come from China. The Kuwait Investment Authority would contribute about $1bn, while $2bn to $4bn would be raised through a public placement of shares. The formula is still being adjusted and there could be last-minute changes, the people involved say. The deal underscores the depth of the problems faced by big banks that suffered heavy losses in the US subprime mortgage crisis. It would follow an injection of $7.5bn into Citigroup by the Abu Dhabi Investment Authority in late November. “The second round is going very well, because Citi is seen as US Inc,” says the regional head of a US investment bank in the Middle East. Citi declined to comment. As more US financial institutions raise capital from foreign sources, largely from sovereign wealth funds, there is also a growing debate about the potential domestic political reaction, particularly during a presidential election year. The deal would mark the first time that the KIA has invested in an ailing US financial institution. KIA, which is known as a conservative investor, is taking a portfolio approach to the US financial crisis, looking to acquire small stakes in many troubled financial firms rather than putting a large chunk of money in one bank. Staff at the KIA could not be reached for comment. The deal highlights China’s growing importance as an exporter of capital. The Chinese government has emphasised a policy of investing abroad to keep the ample liquidity in China from further feeding a bubble in shares and property. “They want to recycle money as there is too much in China,” says Fred Hu, a China-based managing director at Goldman Sachs. “Because of capital controls, only the government can take the money and put it offshore.” The Chinese party in the Citigroup deal is probably a bank such as the Industrial and Commercial Bank of China, or China Development Bank, or an investment arm of the government. However, the distinction between government and quasi-private money is often blurred in China. Potential Chinese investors also include China Investment Corporation, which has been mandated by the government to invest China’s burgeoning reserves abroad, and recently injected $5bn to Morgan Stanley. China’s State Administration of Foreign Exchange, or SAFE, also invests directly offshore. The Development Bank of China, which is not listed, has taken stakes in financial institutions such as Barclays. ICBC is a listed company, which is supposed to be managed in the interests of its shareholders, which include the government. Citi’s capital-raising structure differs from the first round. That involved a complex security that converts into Citi shares and pays an 11 per cent coupon.