Alternatives Briefs:Citigroup closes U.S. venture cap sub

NEW YORK — Citigroup closed Citi Venture Capital, a U.S. subsidiary, and terminated all but one of its executives, according to sources.

The bank still owns and will manage Citi Venture Capital's $150 million private equity investment portfolio of small U.S.-based companies.

William T. Comfort, who had been Citi Venture Capital's chairman, remains with Citigroup as a managing director. Citi Venture Capital's managing partners, Tony Bienstock, Alex Coleman and Joe Levy, were let go.

The move is part of a reorganization of Citigroup Alternative Investments. In February, Citi Property Investors stopped offering a real estate fund of funds and the team left. Citigroup Alternative Investments has kept three private equity divisions: Metalmark, a buyout business that had spun out from Morgan Stanley, which it bought in December; Citi Private Equity, a private equity and mezzanine business; and Citi Venture Capital International, a London-based private equity emerging markets growth-focused subsidiary.

Two years ago, Citigroup spun off its private equity group, which also had been known as Citi Venture Capital and was renamed Court Square.

Jon Diat, Citigroup Alternative Investments spokesman, declined to comment.

LONDON — Nearly half of institutional investors, 46%, are willing to invest in young and/or small hedge funds and 15% would consider such an investment, according to a survey by database manager Preqin Hedge. If the new hedge fund had come from a well-established firm, the percentage of those who would invest rose to 55% and those who would consider doing so increased to 12%. Only 8% of survey respondents said they would seed a new hedge fund, but 12% said they would consider it.

Endowment officials are the most inclined to invest with emerging hedge fund managers, according to the survey; 64% of them would invest in an emerging hedge fund, followed by 60% of public pension plan officials, 50% of family offices and 30% of insurers. Only 14% of corporate pension plan officials said they would invest in an emerging hedge fund.

Preqin Hedge analysts found that the length of hedge fund track records was important to the institutional investors surveyed, with 34% requiring a minimum track record of between one and two years, 33% requiring between three and four years and 24% insisting on at least five years of experience.

Size also mattered: 33% required assets of at least $500 million and 11% required at least $1 billion under management before they would invest.

The survey of 50 institutional investors was conducted in May.

TORONTO — Denham Capital Management's Denham Commodity Partners Fund V closed at $2 billion, above its original target of $1.75 billion, according to sources close to the firm. Denham separated from failed hedge fund manager Sowood Capital Management on July 1. Assets in the fifth fund surpassed the $1.24 billion in the Denham Commodity Partners Fund IV, raised when Denham was Sowood's private equity business. Investors include Harvard Management Co., which oversees Harvard University's $34.9 billion endowment.

AVON, Conn. — Hedge fund manager Alpha Equity Management and real estate manager Praedium Group created a joint venture to offer institutional investors hedge funds and separate accounts in REITs and other publicly traded companies. Alpha Equity, which uses a “fundamentally based, quantitatively applied” method, moved the $105 million it manages in market-neutral and 130/30 real estate strategies to the joint venture, said Charles Krusen, partner at Alpha Equity. The strategies invest in REITs and other publicly traded companies with significant real estate exposure, such as mortgage or casino companies. Praedium is partly owned by Cadim, the Montreal-based real estate manager division of the C$155.4 billion (US$156.8 billion) Caisse de Depot et Placement du Quebec, Montreal.

FORT WORTH, Texas — TPG is targeting $18 billion for a new buyout fund, TPG Partners VI, and about $7 billion for private equity fund TPG Financial Partners, according to information on the website of the $81.5 billion New Jersey State Investment Council, Trenton, which is committing to both funds. TPG Partners VI would be larger than its last buyout fund, the $15.3 billion TPG Partners V. TPG Financial Partners would take minority stakes of less than 50% in large financial services firms. TPG Financial Partners would also participate in buyouts with TPG V and TPG VI, which could result in combined stakes of up to 100% in certain companies.