Citi buys Metalmark Capital as banks get back into private equity
Posted by: in Private Industry NewsFiled under: Deals, Private equity industry
Citigroup (NYSE: C) announced yesterday that it will acquire Metalmark Capital. Terms of the deal were not made public.
Metalmark has been independent since 2004. Before that date, it was owned by Morgan Stanley (NYSE: MS). The head of Metalmark, Howard Hoffen, managed Morgan Stanley Private Equity, which included Morgan Stanley Capital Partners. In the last 20 years, Metalmark has invested over $7 billion in mid-size companies, according to The New York Times.
Another piece in today’s Times recommends that banks are getting back into private equity after years of separating their banking and private equity functions due to concerns over conflicts of interest. Just last year, Citi spun off CVC Equity Partners, a domestic buyout unit, now called Court Square Capital. But the tremendous profits that continue to be generated by private equity are too attractive to ignore, no matter what the conflicts. Talking of conflicts, the Times points out that with the acquisition of Metalmark, Citi will be managing some assets still owned by its rival, Morgan Stanley.
In another sign that the large banks and brokers are getting back into private equity, as well as the growing influence of executives trained in the world of private equity, Morgan Stanley announced today that it has hired two new directors for its global private equity arm. Andy Shinn, who worked for the Carlyle Group, and Aaron Sack, from Apollo Advisors, will join Morgan Stanley as executive directors.
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