Singapore's GIC pares Citi stake; nets $1.6 billion profit

The Government of Singapore Investment Corporation (GIC) the largest sovereign wealth fund in the city-state, has pared its stake in Citigroup to below 5 per cent, making a profit of $1.6 billion in the process.

GIC, Singapore's largest investment fund, said it exchanged US$6.88 billion of convertible preferred stock in Citigroup, together with the US government and other private investors. At a conversion price of $3.25 per share, GIC said, the exchange resulted in having its over-9 per cent stake in Citigroup amidst a rebound in global equity markets on 11 September.

GIC said it has reduced the stake to below 5 per cent through open market sales. "This was the level GIC had intended when it invested in Citigroup through the convertible security. A stake below 5 per cent reflects GIC's goals and desire to be a portfolio investor," a Citi release said.

GIC said it will continue invested in Citigroup as it was confident of the banking group's long-term prospects.

Another Singapore fund, Temasek Holdings, is expected to have lost over $4 billion in a hasty exit from Bank of America-Merrill Lynch and Barclays at the beginning of the year.

GIC, on the other hand, waited for a rally in the market to sell some of its stake in the global banking group whose outlook raised some concerns.

GIC, which invested billions of dollars in Citigroup and UBS since end-2007, had suffered initial losses in the global the financial crisis.