Citibank 2005 Annual Report Download - page 23

21 | Citigroup 2005
Today, Citigroup Alternative Investments (CAI) manages a wide range of
products across five alternative asset classes: private equity, hedge funds,
real estate, structured products, and managed futures.
As one of the world’s largest alternative
asset managers, Citigroup Alternative
Investments (CAI) has $37.6 billion of
capital under management and more
than $100 billion on a levered basis.
CAI manages the company’s proprietary
capital as well as capital from third-party
institutional and high-net-worth clients.
In 2005, we had strong performance,
earning a record $1.4 billion in net
income, an increase of 87 percent over
2004, on revenues of $3.4 billion.
CAI is one of the broadest, most
highly integrated alternative invest-
ment platforms in the fi nancial services
industry. We manage a wide range of
products across fi ve asset classes: private
equity, hedge funds, real estate, struc-
tured products, and managed futures.
Comprising 12 investment centers,
our goal is to enable our investment
teams to draw on their entrepreneurial
skills to capitalize on opportunities,
while benefi ting from the power of
Citigroup’s unparalleled intellectual,
operational, and fi nancial resources.
STRATEGY AND OBJECTIVES
Our goal is to be the world’s premier
alternative investment platform and we
have a unique business model designed
to accomplish that objective. Six char-
acteristics defi ne that business model:
Proprietary investment capital co-
invested with clients CAI manages
$12.2 billion of the company’s proprie-
tary investments. This aligns Citigroup’s
interests with those of investors. We
think fi rst and foremost like a principal,
Citigroup Alternative Investments
High-Net-Worth Individuals...I nstitutions...Pensions...High-Net-Worth
focused on fi nding the most attractive
investment opportunities, and then we
develop products so clients around the
world can invest with us. For example,
in 2005 our real estate group acquired
an interest in Deutsche Annington
Immobilien Gruppe, the largest real
estate company in Germany. Clients
then invested alongside us in this land-
mark deal.
In 2005, our investment products
attracted $6.2 billion of new third-
party capital, more than half from
outside the United States.
History of innovative products
Identifying themes before others is a
critical component to earning out-
standing returns. Citigroup has a long
history of leadership and innovation in
alternative investing. In the 1960s, we
were early participants in private equity.
A decade later, we pioneered one of
the fi rst managed futures programs. In
the late 1980s, we were among the fi rst
to introduce structured credit products,
while in the early 1990s, we launched
our fi rst hedge fund platform.
Integrated, diversifi ed platform The
breadth of our alternative investment
platform allows us to pursue timely
investment themes while maintaining
our objectivity. Unlike more narrowly
defi ned alternative investment platforms,
our breadth helps us remain objective.
We can compare the relative attractive-
ness of different asset classes and better
determine the most attractive opportu-
nities at any given point in time.
Strong global distribution Our third-
party investors include institutions
and high-net-worth individuals. Our
50-person sales and marketing team
located throughout the world assist
clients as diverse as pension funds,
endowments, insurance companies,
banks, and individuals with planning
to help them understand the role
of CAI products in their portfolios.
What’s more, we work in close part-
nership with our businesses in Global
Wealth Management, Corporate
and Investment Banking, and Global
Consumer to harness the power of
Citigroup’s distribution.
World-class service and controls
Building a world-class investment busi-
ness requires a commitment to strong
legal, tax, information technology, and
accounting capabilities that allow the
investment teams to do what they do
best—focus on investing. In addition
to Citigroup’s own risk management,
compliance, and audit functions, our
investment centers are monitored by
numerous regulatory agencies.
Focus on investment performance
The judgment of investment profes-
sionals is, ultimately, most important
to investment performance. Access
to capital, distribution strength, and
information allow CAI to attract and
retain top-caliber talent. In 2005 alone,
we recruited more than 150 talented
investment professionals to our team.