Just a couple of days ago, we were wondering, given the low value of the dollar, where was the acceleration of major investments in US equities and assets from China and the Middle East. Well, here’s some movement, as Citigroup is apparently poised to announce up to $10 billion (or even as much as $14 billion) in capital — from both areas of the world at the same time. WSJ:

Prince Alwaleed bin Talal…is expected to be joined by other investors, including the China Development Bank, people familiar with the matter said. While it isn’t clear how much Prince Alwaleed will invest, the Chinese entity is expected to invest roughly $2 billion, one person said. Prince Alwaleed’s total stake in Citigroup is likely to remain below 5% in order to avoid regulatory scrutiny. However, given that Citi has a stock market value of $140 billion, even a 1% stake would end up being a significant sum of money, and a potential vote of confidence in the struggling bank…the bank is hoping to collect a total of $8 billion to $10 billion from a number of investors, likely including at least one fund affiliated with a foreign government…

Prince Alwaleed…was Citi’s largest individual shareholder. Prince Alwaleed ceded that title last month, when Abu Dhabi’s investment arm paid $7.5 billion for a 4.9% stake in the cash-strapped company.

In recent weeks, though, the bank’s troubles have continued to pile up. Citigroup decided to bring onto its balance sheet $49 billion in assets from seven struggling investment affiliates, a move that further depleted its already weak capital ratios. The New York conglomerate also is facing more than $15 billion in fourth-quarter losses stemming from its exposure to mortgage-related investment vehicles.

Citigroup has declined from about $50 dollars a share to less than $30 in the last few months. Meanwhile, over the last seven years the dollar has declined to about 30 cents in terms of the value of a barrel of oil, so it would appear that some of the investors are getting quite a bargain. We should see a lot more of this ordinary and necessary flow of funds — that is, until the politicians start screwing it up.

This entry was posted on Friday, January 11th, 2008 at 6:06 pm and is filed under business, China, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.