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Monday, December 7, 2009

Kuwait fund sells stake in Citigroup

KUWAIT: Kuwait's sovereign wealth fund yesterday said it had sold its stake in US bank Citigroup, becoming the latest Gulf investor to sell foreign shares as markets improve.

Kuwait Investment Authority (KIA) transferred its preferred stocks to normal stocks and sold them for $4.1 billion. It made a profit of $1.1bn or a 37 per cent return on its initial investment.

KIA had invested $3bn in Citigroup in preferred stocks in January 2008.

It did not disclose the number of shares it had sold or what it planned to do with proceeds.

The fund, which manages state assets, has come under fire from some parliamentarians for investing $5bn in Citigroup and Merrill Lynch. Merrill Lynch has since been bought by Bank of America.

"Every sovereign wealth fund has its own agenda and plan for investments ... but one reason (for KIA's Citigroup stake sale) might be that the situation is better than before in the US and ... maybe investors can pull back their money," said Naser Al Nafisi, general manager for Al Joman Centre for Economic Consultancy in Kuwait.

In November, Qatar sold half its Volkswagen preference shares, cashing in on recent gains and raising around 1.5bn euros ($2.26bn) for possible deals.

The value of foreign assets managed by the KIA fell by about 9bn dinars ($31.58bn) in the nine months to December 2008, due to the financial crisis, two lawmakers said in February after a government briefing.

Since October 2008, KIA has reduced the exposure of its key Future Generation fund to global equities markets.

Source : Gulf Daily News

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