Abu Dhabi sovereign fund files lawsuit against Citigroup

17 December 2009

Wealth fund tries to back out of $7.5bn Citigroup investment

Sovereign wealth fund the Abu Dhabi Investment Authority (Adia), has filed a lawsuit against the US’ Citigroup relating to its November 2007 agreement to invest $7.5bn in the bank.

Adia alleges that Citigroup was involved in “fraudulent misrepresentations in connection with the sale” and is asking for the investment agreement to be revoked, or for damages in excess of $4bn.

The November 2007 deal involved Adia investing in “equity units” of Citigroup, that would begin converting to shares between March 2010 and September 2011. Under the terms of the original deal the conversion would occur at price of between $31.83 to $37.24.

On 15 December, Citigroups shares were trading at $3.56, meaning that Adia would book a substantial loss if the conversion were to go ahead. When Adia made the investment in November 2007 Citigroup’s shares were trading about $30.

Citigroup has responded to the claim, filed in New York, saying “the allegations are entirely without merit”, and that it “intends to defend against them vigorously”.

In early December, the Kuwait Investment Authority said it made a profit of $1.1bn from the sale of its $4.1bn of shares in Citigroup, purchased in January 2008.

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