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Sun 6 Dec 2009 03:10 PM

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Kuwait Investment Authority sells Citigroup stake

UPDATE 2: Gulf state's sovereign wealth fund makes $1.1bn through sale.

Kuwait's sovereign wealth fund said on Sunday it had sold its stake in US bank Citigroup, becoming the latest Gulf investor to sell foreign shares as markets improve.

Kuwait Investment Authority (KIA) transferred the preferred stocks it owned in Citigroup to normal stocks and sold all of them for $4.1bn, KIA said in a statement.

KIA said it made a profit of $1.1bn from the sale, or a 37 percent return on its initial investment.

"Kuwait Investment Authority had invested an amount of $3bn in Citigroup in the form of preferred stocks in January 2008," KIA said.

It did not disclose the number of shares it had sold or what it planned to do with proceeds from the sale.

Kuwait's sovereign wealth fund, which manages state assets in the world's fourth-biggest oil exporter, has come under fire from some parliamentarians for investing $5bn in Citigroup and Merrill Lynch. Merrill Lynch has since been bought by Bank of America.

"Every sovereign wealth fund has its own agenda and plan for investments ... but one reason (for KIA's Citigroup stake sale) might be that the situation is better than before in the US and ... maybe investors can pull back their money," said Naser al-Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait.

In November, Gulf neighbour Qatar sold half its Volkswagen preference shares, cashing in on recent gains and raising around 1.5 billion euros ($2.26bn) for possible future deals.

The value of foreign assets managed by the KIA fell by about 9 billion dinars ($31.58bn) in the nine months to December 2008, due to the financial crisis, two lawmakers said in February after a government briefing. KIA managed assets worth about 49 billion dinars at December 31, the MPs said.

Since October 2008, KIA has reduced the exposure of its key Future Generation fund to global equities markets, shifting assets to cash funds, the government said in January.

In May, Finance Minister Mustapha al-Shamali told Reuters that the Gulf state was not reducing its dollar assets and was keeping some liquid assets to meet its budget requirements. (Reuters)

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