ValueAct Capital Partners has built a $1.2-billion stake in Citigroup (NYSE: C) in a wager that the U.S. bank's businesses serving corporations will help it rebound.
ValueAct has built the position over the past four to five months and is growing its stake opportunistically, The Wall Street Journal reported Monday, citing a letter to investors. The stake equals about .07% of the U.S. bank, according to the Journal.
The wager on Citigroup, led by CEO Michael Corbat, is partially based on its treasury services business, according to the Journal. ValueAct isn't calling for a strategic shakeup, the report said.
That move echoes a 2016 investment by ValueAct in shares of Morgan Stanley (NYSE: MS), another bank on the rebound after the financial crisis.
"We have been having constructive conversations with ValueAct and welcome them as investors,'' Mark Costiglio, a spokesman for New York-based Citigroup, told the media.
The San Francisco investment fund has been talking to management and supports Citigroup Chief Executive Michael Corbat, partially because he rose through what it views as the bank’s crown jewel, the part of the bank that works closely with large corporate clients, according to people familiar with the investment.
Corbat has also championed growth initiatives, such as Mexican retail banking and global equities trading, and held the bank’s first investor day in nearly a decade last July to signal Citi’s emergence from years of troubles after it was ravaged in the financial crisis.
Citigroup shares galloped $1.26, or 1.8%, to $69.76.
