The Abu Dhabi Investment Authority invested $7.5 billion of much needed capital into Citigroup through the purchase of convertible bonds today. The bonds must be converted to Citigroup equity at $32 to $37 per share starting in 2010. In the meantime, the Authority will also be paid a handsome 11% annual rate of interest.
The timely infusion will help Citigroup shore up its capital base and likely help it to maintain its dividend in spite of heavy and still uncertain losses related to failing collateralized debt obligations. It also looks like a pretty sweet deal for Abu Dhabi which in effect gets an 11% yield on three year paper.
A little over ten years ago, I had the opportunity to meet with three representatives of the Abu Dhabi Investment Authority, including their primary investment officer. They were visiting my former employer, where we managed growth equity portfolios for individuals, foundations and institutions. They were at our firm on business, trying to decide whether or not to hire us as an outside equity manager. Their minimum allocation, I recall, was something in the neighborhood of $350 million. Big business for sure, even when oil was just about $20 per barrell.
The meeting was a short one and we didn’t win any business. But to this day, I still remember one thing about their visit. After taking a tour of our offices, the two younger gentlemen were extremely interested — almost infatuated — by the Trotter treadmills in our exercise room. I gave them the phone number and address of our local fitness equipment distributor, and they were on their way.
I don’t know how many treadmills Exercare sold that day, but I’m sure it was a nice windfall.
Ditto Citigroup.
The timely infusion will help Citigroup shore up its capital base and likely help it to maintain its dividend in spite of heavy and still uncertain losses related to failing collateralized debt obligations. It also looks like a pretty sweet deal for Abu Dhabi which in effect gets an 11% yield on three year paper.
A little over ten years ago, I had the opportunity to meet with three representatives of the Abu Dhabi Investment Authority, including their primary investment officer. They were visiting my former employer, where we managed growth equity portfolios for individuals, foundations and institutions. They were at our firm on business, trying to decide whether or not to hire us as an outside equity manager. Their minimum allocation, I recall, was something in the neighborhood of $350 million. Big business for sure, even when oil was just about $20 per barrell.
The meeting was a short one and we didn’t win any business. But to this day, I still remember one thing about their visit. After taking a tour of our offices, the two younger gentlemen were extremely interested — almost infatuated — by the Trotter treadmills in our exercise room. I gave them the phone number and address of our local fitness equipment distributor, and they were on their way.
I don’t know how many treadmills Exercare sold that day, but I’m sure it was a nice windfall.
Ditto Citigroup.