Citi and Credit Suisse make alternative moves
Citi acquires hedge fund Old Lane, while Credit Suisse hires a private equity team from Ritchie Capital Management.
Two announcements in the last week have reinforced how critical a presence in alternatives is becoming to the future strategy of global banks. It also shows that banks will adopt non-traditional strategies to bring on board the people they feel are best suited to lead this business.
On April 13, Citi said it would buy 100% of Old Lane Partners - a global, multi-strategy hedge fund and a private equity fund with total assets under management and private equity commitments of $4.5 billion. Old Lane will now operate as part of Citi Alternative Investments (CAI). Financial terms of the transaction have not been disclosed but media has speculated that Citi will pay more than $600 million for the acquisition.
Old Lane was founded by Hari Aiyar, Jonathan Barton, John Havens, George James, Brian Leach, Vikram Pandit, and Guru Ramakrishnan. Pandit and Havens are the most high-profile names associated with the firm which has offices in New York, London, Mumbai and Chennai. Pandit will become CEO of CAI, a business head, and a member of Citi's operating and management committees. Havens will be president of CAI and will also join Citi's management committee.
Media speculation is rife that one of the reasons for the acquisition is that Pandit could be in the running to succeed Charles Prince, Citi's chairman and CEO, and this form of deal was most acceptable to both parties. A few years ago, Pandit was a potential successor to Morgan Stanley's former CEO, Philip Purcell, but quit the firm in early 2005 due to management differences shortly before Purcell himself resigned.
While terming the deal an ôinvestment as much as an acquisitionö in a written statement, Prince says: "This is an investment in world-class talent at Old Lane; in a senior leadership team with a track record of building profitable businesses in institutional securities; and an investment in Vikram and John, each of whom has a clear record of achievement in cutting-edge financial services spanning more than 20 years, to lead CAI."
A week earlier, on April 5, Paul Calello, the CEO of Credit Suisse in Asia-Pacific, announced he was expanding the bank's private equity team by adding six members, including a new head of the business in Asia. Harjit Bhatia, formerly chairman and CEO at Ritchie Capital Management in Asia, has joined the Swiss bank as managing partner to head private equity.
Bhatia brought with him five members of his team from Ritchie - Hemang Raja, Rakesh Mital, Soma Ghosal Dhar, Isiah Zhang and Imelda Tham.
In his statement about the hire, Calello cited the firmÆs desire to replicate its strengths in private equity elsewhere in the world by building a strong Asia-Pacific franchise. It was well-known in the financial services community in the region that Calello had been looking to strengthen the firmÆs position in the alternatives space.
In both instances the firms have gained an established India franchise. Old LaneÆs international presence beyond New York and London is in India. And the Ritchie team gives Credit Suisse a presence in the private equity space in India through Hemang Raja and Soma Ghosal, both based in Mumbai.
The deals also raise an interesting question: are hedge funds and private equity players realising the benefits of working within a larger organisation framework? It remains to be seen which model will be more successful in the long run.
On April 13, Citi said it would buy 100% of Old Lane Partners - a global, multi-strategy hedge fund and a private equity fund with total assets under management and private equity commitments of $4.5 billion. Old Lane will now operate as part of Citi Alternative Investments (CAI). Financial terms of the transaction have not been disclosed but media has speculated that Citi will pay more than $600 million for the acquisition.
Old Lane was founded by Hari Aiyar, Jonathan Barton, John Havens, George James, Brian Leach, Vikram Pandit, and Guru Ramakrishnan. Pandit and Havens are the most high-profile names associated with the firm which has offices in New York, London, Mumbai and Chennai. Pandit will become CEO of CAI, a business head, and a member of Citi's operating and management committees. Havens will be president of CAI and will also join Citi's management committee.
Media speculation is rife that one of the reasons for the acquisition is that Pandit could be in the running to succeed Charles Prince, Citi's chairman and CEO, and this form of deal was most acceptable to both parties. A few years ago, Pandit was a potential successor to Morgan Stanley's former CEO, Philip Purcell, but quit the firm in early 2005 due to management differences shortly before Purcell himself resigned.
While terming the deal an ôinvestment as much as an acquisitionö in a written statement, Prince says: "This is an investment in world-class talent at Old Lane; in a senior leadership team with a track record of building profitable businesses in institutional securities; and an investment in Vikram and John, each of whom has a clear record of achievement in cutting-edge financial services spanning more than 20 years, to lead CAI."
A week earlier, on April 5, Paul Calello, the CEO of Credit Suisse in Asia-Pacific, announced he was expanding the bank's private equity team by adding six members, including a new head of the business in Asia. Harjit Bhatia, formerly chairman and CEO at Ritchie Capital Management in Asia, has joined the Swiss bank as managing partner to head private equity.
Bhatia brought with him five members of his team from Ritchie - Hemang Raja, Rakesh Mital, Soma Ghosal Dhar, Isiah Zhang and Imelda Tham.
In his statement about the hire, Calello cited the firmÆs desire to replicate its strengths in private equity elsewhere in the world by building a strong Asia-Pacific franchise. It was well-known in the financial services community in the region that Calello had been looking to strengthen the firmÆs position in the alternatives space.
In both instances the firms have gained an established India franchise. Old LaneÆs international presence beyond New York and London is in India. And the Ritchie team gives Credit Suisse a presence in the private equity space in India through Hemang Raja and Soma Ghosal, both based in Mumbai.
The deals also raise an interesting question: are hedge funds and private equity players realising the benefits of working within a larger organisation framework? It remains to be seen which model will be more successful in the long run.
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