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Citi's Investment Arm Buys SPAC Stake

Citi, through four investment vehicles, has bought a sizeable minority percentage of special purpose acquisition company Global Consumer Acquisition Co.


Citi, through four investment vehicles, has bought a sizeable minority percentage of special purpose acquisition company Global Consumer Acquisition Co.

Citigroup Global Markets took a 6.9% stake in the SPAC's common stock, its filing with the Securities and Exchange Commission said, also matching the 6.9% stake Citigroup Financial Products bought. Citigroup Inc. revealed a 10.1% stake buy and Citigroup Global Markets Holdings took a 6.9% stake, according to the filing.

Because Citi has not been active in the SPAC market since eliminating in September 2008 the holdings of Old Lane, the hedge fund run by Vikram Pandit prior to his assuming the chief executive role of Citigroup, its investment in Global Consumer Acquisition Co. is significant not simply because of the overall size of the stake it now owns.

At the end of last year, Global Consumer Acquisition Co. ushered in new directors and a new CEO, makes it likely that the SPAC will announce a merger, and that it may also be one of the few blank check companies that will succeed in getting a deal approved. SPACs that completed recent transactions, including Hyde Park Acquisition Co. and Vector Intersect Security Co., have seen an influx of new investors, directors or executives immediately preceding a deal.

"It is likely they will soon announce their target," said one individual who described himself as familiar with the management's strategy.

Global Consumer did not respond to several calls seeking comment. Citi also did not respond to multiple requests for comment.

Jason Ader, now Global Consumer's chief executive, replaced at the end of last year Scott LaPorta; Ader is still the SPAC's chairman. Simultaneously, the SPAC announced the appointments of Michael B. Frankel, Andrew Nelson, Richard A.C. Coles, and Mark Schulhof to director roles. At that time, the company's director team of LaPorta, Robert M. Foresman, Carl H. Hahn, Philip Marineau, Marc Soloway and Steven Westly resigned.

At the time of his appointment, Ader said: "[W]e see tremendous opportunity right in our backyard, particularly in our core competence of hospitality, leisure, and gaming, and in distressed assets, and we look forward to working with the new board of directors, who are all based in the US, that can pursue the deal-making process in those markets."

In a separate federal filing, Global Consumer announced it has moved its cash in trust away from the JPMorgan US Treasury Plus Money Market Fund. Now, according to its 8-K filed with the Securities and Exchanges Commission, "the trust assets are invested in the Federated U.S. Treasury Cash Reserve Fund."

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