"Citigroup Inc. is closing a hedge fund founded by Chief Executive Vikram Pandit, 11 months after Citigroup bought the fund's management company for $800 million. ... Pandit personally reaped at least $165 million when Citigroup bought Old Lane [OL] in July 2007, following its founding the previous year. ... But as the fund struggled, Citigroup was forced to choose between pumping new money into it or shutting it down. ... Pandit delivered a sterling reputation, a thick Rolodex of contacts around the world and a team of hedge-fund colleagues with deep experience in India and other fast-growing emerging markets. ... [OL] has essentially broken even since its inception. ... Pandit was required to park in [OL] about $100 million of his proceeds from the hedge fund's sale to Citigroup. ... With [OL] closing, Mr. Pandit will have to move that money to other Citigroup investment vehicles", my emphasis, David Enrich and Jenney Strasburg (E&S) at the WSJ, 12 June 2008.
Poor baby. Pandit "will have to move" the $100 milllion. My spin: this was contemplated when Citigroup brought Pandit aboard. The $800 million was compensation to Pandit and his "associates" 11 months ago, Citigroup "bought" no asset. $800 million for a Rolodex? Hey Citigroup, you can have mine for $80 million. I'm waiting. E&S miss the point: closing OL "frees up Pandit's $100 million, he's not being forced to do anything. "Forced to choose"? I doubt Citigroup ever intended to keep OL alive any longer than was necessary to disguise what I believe to be it's real reason for "buying" it. The Citigroup-Pandit transaction looks like a sham. Mike Garcia, are you listening?
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