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Citigroup stake sale may meet China opposition
2008-01-14
Citigroup Inc's (C.N) plans to raise capital by selling a $2 billion stake to China Development Bank (CHDB.UL) may be in jeopardy due to Chinese government opposition, The Wall Street Journal reported on Monday. The report, quoting a person familiar with the situation, said Chinese government opposition surfaced over the weekend. It added, however, that it was not clear whether the deal had been scuttled. A Citigroup spokesman in Hong Kong, Richard Tesvich, declined to comment, while a spokesman for state-owned China Development Bank could not immediately be reached for comment. Battered by the subprime mortgage crisis, Citigroup is expected to report a fourth-quarter loss on Tuesday and may also announce it has secured additional capital of between $8 billion and $14 billion from sources such as the Middle East, media reports have said. Saudi Arabian Prince Alwaleed bin Talal, Citigroup's largest individual investor, is among those who will inject new cash, the Wall Street Journal reported on Friday. A source at China Development Bank who is familiar with the situation but not directly involved told Reuters earlier on Monday that Citigroup and China Development Bank had been in talks towards a possible capital injection from the Beijing-run policy bank but that no deal had yet been agreed. The structure of a potential deal could include an equity investment as well as the purchase of debt, the source told Reuters. Cash-rich government investment vehicles from the Middle East and Asia have been taking multi-billion dollar stakes in ailing western financial firms in recent months. In November, the Abu Dhabi Investment Authority invested $7.5 billion in struggling Citigroup. In December, China's new sovereign wealth fund, China Investment Corp Ltd, took a $5 billion stake in Wall Street's Morgan Stanley (MS.N). (Reporting by Ritsuko Ando in New York, Tony Munroe in Hong Kong and George Chen in Shanghai; Editing by Quentin Bryar)
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