New York: Citi has announced that it has reached an agreement to sell equity units, with mandatory conversion into common shares, in a private placement to the Abu Dhabi Investment Authority (ADIA), to the amount of $7.5 billion.

ADIA's aggregate ownership in Citi's common shares, including the conversion of these equity units, will total no more than 4.9 per cent of Citi's total shares outstanding, according to a press release on the company's website.

"This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business," said Win Bischoff, Citi's acting chief executive officer.

Bischoff had taken over the reigns from the erstwhile CEO Chuck Prince, who stepped down as Citigroup's chairman and chief executive on 4 November. It was on this day that Citi had announced that it would likely write down its portfolios' value by $8 billion to $11 billion in the fourth quarter, chiefly because of exposure to assets tied to sub-prime mortgages, which led to a loss of about $6.5 billion.

"It builds on a series of actions we have taken over the past several months to strengthen our capital base, which have included sales of certain non-strategic assets, the issuance of trust preferred securities, and the previously announced plan to use common stock to purchase 32 per cent of Nikko Cordial in Japan. In addition, ADIA is a significant participant in alternative investments and emerging markets financial services, two areas in which we have major positions and have been expanding.

"This investment also enables us to access capital in an efficient manner, and is consistent with our strategy of maintaining a balance sheet that benefits from highly diverse sources of funding in terms of both geography and type of security," Mr. Bischoff continued.

"Citi possesses a unique position in the financial markets throughout the world. We see in Citi a highly respected company with a premier brand and with tremendous opportunities for growth," said ADIA's Managing Director, Sheikh Ahmed Bin Zayed Al Nahayan. "This investment reflects our confidence in Citi's potential to build shareholder value."

ADIA has agreed not to own more than a 4.9 per cent stake in Citi, and will have no special rights of ownership or control and no role in the management or governance of Citi, including no right to designate a member of the Citi Board of Directors.

Substantially all of the investment proceeds will be treated as Tier1 capital for regulatory capital purposes. Accordingly, it will support Citi's progress toward its goal of achieving its targeted capital ratios by the end of the first half of 2008. The investment is expected to close within the next several days.

Each equity unit is mandatorily convertible into Citi shares at prices ranging from $31.83 to $37.24 per share. The equity units convert to Citi common shares on dates ranging from 15 March 2010, to 15 September 2011, subject to adjustment.

Each equity unit will pay a fixed annual payment rate of 11 per cent, payable quarterly.

The payment rate reflects market terms based on the conversion premium as well as Citi's current dividend yield.

Citi's press release called the Abu Dhabi Investment Authority (ADIA) a "well-established, well-respected institutional investor committed to the stability of the global financial infrastructure."

ADIA is the sovereign wealth fund of the government of Abu Dhabi, one of the seven emirates that comprise the federation of the UAE.