Citigroup and the Dudley PFI deal
Report by Greg Dropkin
Published: 09/10/00

Next week anti-capitalist protestors will target Citigroup as “one of the key powerbrokers and central planners of the corporate global economy” in collaboration with the World Bank. Last week, Dudley healthworkers began 10 days of strike action against a Private Finance Initiative scheme backed by Health Minister John Denham.

Any connection? Perhaps. The key member of the Summit Healthcare consortium planning to transfer 500 UNISON members out of the NHS as part of a PFI scheme to redevelop local hospitals is Building & Property.

Formed from the privatised Property Services Agency which carried out extensive work for the Ministry of Defence, B & P is now 75% owned by venture capitalists CVC Capital Partners Ltd.

CVC’s precise role in the Dudley PFI scheme is still hidden, but with a controlling interest in Building & Property they must have approved the deal.

CVC were originally formed in 1982 as Citicorp Development Capital, and renamed Citicorp Venture Capital in 1984.

After a management buyout in 1993, CVC Capital Partners has acted as Citigroup’s European private equity investment adviser and manages funds worth $4.1 bn (£2.5 bn) including some from Citigroup, of which over $3.1 bn are available for new investments in UK and Europe.

CVC and Citigroup are also tied together with a $750 m “private equity pool” for Asia. (CVC press release (15.02.00)) CVC has raised $500m while “Citigroup, the world’s largest financial services company, has formed an alliance with CVC and has independently committed an additional $250 million (Euro 250million) for its investment programme in the Asia Pacific region.

“The Fund will initially focus on opportunities in China, Hong Kong, Korea, Singapore, Taiwan, Thailand, Australia and Japan but will invest across the whole region, targeting companies with a value of US$25 million and above. Sectors covered will include manufacturing, services, media, telecoms and distribution.”

Vincent Fan, Chief Executive Officer of CVC Asia Pacific Limited, commented: “...It is clear that private equity is becoming more acceptable to local owner-managers in the region.” CVC Chair Michael Smith said “We’re delighted to be working closely with Citigroup...”

Back in Birmingham last April another venture capitalist, Jon Moulton, tried to walk off with Rover. Perhaps Michael Smith’s move into the West Midlands health service through Building & Property will meet a similar fate.