The oil rich government of Abu Dhabi has decided to help save Citigroup from its credit woes. The IHTreports that the Abu Dhabi Investment Authority is purchasing a $7.5 billion stake in Citigroup.
By agreeing to purchasing a $7.5 billion stake in the faltering banking giant Citigroup, the secretive, government-controlled Abu Dhabi Investment Authority is breaking with tradition.
As the largest sovereign wealth fund in the world, with assets estimated at $650 billion, it poured money in the past into low-return, low-profile investments or small emerging market deals, unlike its flashy emirate neighbor, Dubai.
But a falling dollar and a growing cash pile are spurring Abu Dhabi to change strategy, according to analysts, economists and deal makers, who said that more big-ticket deals might be ahead.
Flush with cash from its oil exports, Abu Dhabi turned to Wall Street, using a complicated transaction late Monday to buy 4.9 percent of Citigroup, acquiring high-yield, convertible stock that must be exchanged for common stock between March 2010 and September 2011.
Abu Dhabi will obtain a 4.9 percent stake in Citigroup with the investment. The move comes just after Citigroup's shares hit a five-year low.
