Citigroup allows hedge fund ValueAct more access

Published:Friday, January 11, 2019
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FILE PHOTO: The Citigroup Inc (Citi) logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren

NEW YORK (Reuters) - Citigroup Inc (C.N) will give ValueAct Capital more access to its books and board of directors, signaling that the bank and the activist investing firm are deepening their relationship roughly a year after ValueAct first invested in Citi.

The two said on Friday that they had entered into an “information sharing and engagement agreement,” which will allow for a “deeper level of engagement and cooperation.”

The San Francisco-based hedge fund, one of the industry’s most closely watched so-called activist investors, unveiled a $1.2 billion stake in New York-based Citi last May, and said it liked the bank’s low risk and reliable revenue.

Value Act currently owns about 1.3 percent of Citigroup’s outstanding common stock and is one of its larger shareholders.

ValueAct, which differentiates itself from many more voluble activists, did not ask for a board seat at the time of its investment and said on Friday that it is not looking for one now. Many activist investors immediately demand a number of board seats and threaten proxy contests to get them. ValueAct has long preferred to work more collaboratively and behind the scenes, something that has earned respect from its investors and potential targets.

But when the time is right and some potential conflicts are eliminated, the hedge fund is expected to propose a candidate for the board, the statement said. ValueAct currently holds a board seat at Alliance Data Systems Corp (ADS.N), which competes with Citigroup in issuing credit cards for retailers.

ValueAct and Citigroup on Friday declined to comment beyond the release.

Citigroup has made a number of changes since ValueAct first commented on its stake in May in a letter to its investors. Citigroup parted ways with the head of its struggling branded credit cards division, announced a reorganization of part of its investment bank, and named a new chairman and a new chief financial officer to replace men retiring from those posts.

Citigroup shares have continued to lag those of other big banks because of doubts about its ability to increase revenue following extensive restructuring after the financial crisis.

Reporting by Svea Herbst-Bayliss and David Henry in New York

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