Thursday, November 20, 2008

Alwaleed Plans to Boost His Stake in Citigroup to 5%; GE - Not Seeking Sovereign-Wealth Investment

Saudi billionaire Prince Alwaleed bin Talal plans to increase his stake in Citigroup to 5% after the bank, once the biggest in the U.S., lost almost a quarter of its value yesterday.

Alwaleed, who owns less than 4% of the New York-based company, said in a statement he's buying shares because he "strongly believes that they are dramatically undervalued."

Citigroup, buffeted by four straight quarterly losses, has raised about $75 billion since December by selling assets and equity stakes, including a $25 billion injection from the U.S. Treasury. Alwaleed would have to spend about $350 million to boost his stake to 5% from 4%, based on yesterday's closing price.

Those steps will help make Citigroup "a long-term winner in the financial-services industry, Alwaleed, 53, said. He said he "expresses his full and complete support to Citi management, led by CEO Vikram Pandit, and believes they are taking all the necessary steps to position the company to withstand the challenges facing the banking industry and the global economy."

Alwaleed was lauded by Time magazine as the Middle East's answer to U.S. billionaire investor Warren Buffett after a 1991 investment in Citigroup's predecessor helped make him one of the world's five richest people.

In a 2005 interview with Charlie Rose of the U.S. Public Broadcasting Service, Alwaleed outlined his criteria for buying stocks. "The return on investment in the coming five to 10 years has to be within our acceptable conditions," he said. That means "at least 20 to 25 percent" annual returns.

GE - Not Seeking Sovereign-Wealth Investment

General Electric said on Thursday it has no intention of raising additional capital from sovereign-wealth funds.

The company is in talks with Asian investors about joint ventures similar to one formed earlier this year with Abu Dhabi investment agency Mubadala Development Co, said GE spokesman Russell Wilkerson.

"With the success of our existing global partnerships, we are always talking to a variety of funds and third parties about new opportunities," Wilkerson said in an email. "We are not talking with any sovereign wealth funds or other global investment funds about a capital investment in the company."

An earlier report in the Financial Times Deutschland newspaper said the company was in talks with Singapore's Temasek and GIC, as well as China's CIC and Safe, about capital investment in GE and joint ventures.

GE and Mubadala in July formed an $8 billion joint venture to provide commercial finance in the Middle East and Africa.

GE is not looking to raise additional capital as it did with a $15 billion stock sale in October that included $3 billion of preferred shares sold to billionaire Warren Buffett's Berkshire Hathaway.

The Fairfield, Connecticut-based company, which has businesses ranging from jet engines to real estate to the NBC Universal media business, last week received the backing of the U.S. Federal Deposit Insurance Corp for up to $139 billion of GE Capital debt, and has also signed on to a U.S. program to buy commercial paper.

Sources: Bloomberg, Reuters

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