Citigroup Launches Hedge Fund Placement Unit

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Citigroup is setting up a placement agency business to work with hedge funds that want to expand their investor base and institutional investors targeting alternatives as potential investment vehicles.

The investment bank has hired Mark Marxer, a former head of marketing at Black River Asset Management, to head a team of up to six people who will work alongside Citigroup's private equity placements team.

The team will report to Doug Blagdon, head of Citigroup's private equity placements group, and John Pollart, a managing director in capital markets.

Blagdon said: "We're in talks with a number of professionals in the industry and expect to announce further hires in the near future. We're looking to build a group of four to six people to complement our existing private equity distribution team."

Pollart said the move was an extension of Citigroup's hedge fund brokerage and private equity placement businesses.

He said: "We are working with hedge funds interested in expanding their investor base... and institutional investors looking at private equity and hedge funds as potential investments."

Blagdon said the business would focus on third-party hedge funds.

Marxer joins as a managing director reporting to Blagdon and Pollart. He most recently ran a hedge fund business development and consulting boutique, MMX Management. Marxer was a founding member of RedSky Partners, which merged into Black River in 2005.

The new placement group is a joint venture between the global banking and global markets divisions.

According to the Bank of New York and management consultants Casey, Quirk and Associates published a report last month in which they said global institutional investor capital in hedge funds would increase from about $360 billion to more than $1 trillion by 2010.

The report said institutional investors would account for more than half of total flows into hedge funds in that period.