Introduction
Citi Global Alternatives, LLC (“Citi Alternatives”) is a Delaware limited liability company and an
indirect, wholly-owned subsidiary of Citigroup Inc. (“Citigroup”). Citigroup is a publicly held
company. As a result of internal Citi organizational changes and other considerations that occurred
in 2022, the registered investment adviser business of Citi Private Alternatives, LLC (previously
known as Citi Private Advisory, LLC) (“CPA”) was moved in its entirety into a newly formed
entity, Citi Alternatives. Citi Alternatives commenced operations in September 2022 (succeeding
the registered investment adviser business of CPA, which commenced operations in October
2010). Citi Alternatives provides advisory services to private investment funds, including feeder
funds organized to invest primarily in other private investment funds advised by third-party
managers (each, a “Feeder”), funds of hedge funds (each, a “Fund of Hedge Funds”), funds of
private equity and real estate funds (each, a “Fund of PERE Funds,” and collectively with the
Funds of Hedge Funds referred to as “Funds of Funds”), and private funds that invest in a portfolio
of co-investment opportunities sourced from third party managers (“Co-Investment Funds”).
These third-party managed funds include hedge funds, private equity funds (and co-investment
vehicles) and real estate funds (and co-investment vehicles). Citi Alternatives also provides
investment advice to separately managed accounts (“Managed Accounts”) on either a fully
discretionary or non-discretionary basis. In addition, Citi Alternatives provides certain non-fee
services as described below.
Clients should read and consider carefully the information contained in this brochure. While
Citi Alternatives believes that its professional investment advice can work to benefit many
clients, there is no assurance that the objectives of any Feeder, Fund of Funds, Co-Investment
Fund, Managed Account or other investment program described herein will be achieved.
Services Provided: Feeder Platforms
HedgeForum Platform
Citi Alternatives provides investment advice to private investment funds that are organized to
invest primarily in other private investment funds commonly known as hedge funds through its
HedgeForumSM platform (“HedgeForum” or “HedgeForum Platform”). Hedge funds are
professionally managed, pooled investment vehicles that use investment techniques including but
not limited to active trading, short selling, arbitrage and leveraging.
Because of high minimum investment levels and other reasons, certain eligible investors generally
would not have the opportunity to invest directly in certain hedge funds, and the HedgeForum
Platform enables such investors to invest indirectly in these single manager hedge funds managed
by third parties. Typically, each hedge fund offered on HedgeForum (each, a “HedgeForum Master
Company”) will be a separate legal entity that acts as a master vehicle in a “master-feeder”
structure, and each HedgeForum Master Company will often have, directly or indirectly, either or
both a U.S. feeder fund and a Cayman Islands feeder fund (each, a “HedgeForum Feeder”) through
which U.S. taxable and U.S. tax-exempt and non-U.S. investors, respectively, indirectly invest into
a HedgeForum Master Company. Each HedgeForum Master Company may be organized in one
of a number of different jurisdictions, but each is commonly organized in the Cayman Islands or
Delaware. A third-party hedge fund manager (each, a “HF Portfolio Manager”) sponsors and
advises each HedgeForum Master Company and manages the assets of such HedgeForum Master
Company (either directly or by managing a master trading vehicle in which such HedgeForum
Master Company invests substantially all of its assets).
Private Equity Platform
Citi Alternatives provides investment advice to private investment funds (each a “PE Feeder”) that
are organized to invest primarily in private equity funds through its private equity platform
(“Private Equity Platform”).
Private equity funds are limited partnerships, limited liability companies or other investment
vehicles. Private equity funds typically acquire non-publicly traded interests that they may hold
for extended periods of time. These securities often are acquired in management buyouts, or in
connection with company growth or restructurings. These securities may take the form of common
equity, preferred equity, debt or other similar instruments. The capital provided by the investments
may be used in the early or intermediate stages of an enterprise or may fund the expansion of an
established business.
Because of high minimum investment levels and other reasons, certain eligible investors generally
would not have the opportunity to invest directly in certain private equity funds, and the Private
Equity Platform enables such investors to invest indirectly in these single manager private equity
funds managed by third parties. Typically, PE Feeders offered on the Private Equity Platform act
as feeder funds that invest in an underlying private equity fund managed and advised by a third
party (each, a “PE Master Company”). The PE Master Company is a separate legal entity that acts
as a master vehicle in a “master-feeder” structure, and each PE Master Company will have either
or both a U.S. PE Feeder and a Cayman Islands, Luxembourg or other non-U.S. domiciled PE
Feeder that enable U.S. taxable and U.S. tax-exempt and non-U.S. investors to invest through such
PE Feeders into the PE Master Company. Each PE Master Company may be organized in one of
a number of different jurisdictions, but is commonly organized in the Cayman Islands,
Luxembourg or Delaware. A third-party private equity fund manager (each, a “PE Portfolio
Manager”) sponsors and advises each PE Master Company and manages the assets of such PE
Master Company (either directly or through one or more of its affiliates).
The Private Equity Platform may also enable certain eligible investors to invest via a PE Feeder
alongside a PE Master Company in a specified company or transaction (either directly or through
an investment in another vehicle managed by the PE Portfolio Manager (each, a “PE Co-
investment SPV Vehicle”)).
Real Estate Platform
Citi Alternatives provides investment advice to private investment funds (each, a “RE Feeder”)
that are organized to invest primarily in real estate funds or real estate co-investments through its
real estate platform (“Real Estate Platform”).
Real estate funds are limited partnerships, limited liability companies and other investment
vehicles that invest, directly or indirectly, in real estate and real estate-related investments, which
is broadly defined. Such funds typically acquire interests in real estate properties that they may
hold for extended periods of time. A real estate fund may also acquire publicly-traded shares of
Real Estate Investment Trusts (“REITs”) or shares in other companies that own, develop, operate
or finance real estate as their primary business (“REOCs”) or Commercial Mortgage-Backed
Securities (“CMBS”) or other debt instruments, both publicly and privately traded.
Because of high minimum investment levels and other reasons, certain eligible investors generally
would not have the opportunity to invest directly in certain real estate funds, and the Real Estate
Platform enables such investors to invest indirectly in these single manager real estate funds
managed by third parties. Typically, RE Feeders offered on the Real Estate Platform act as feeder
funds that invest in an underlying real estate fund managed and advised by a third party (each, a
“RE Master Company” and, together with Hedge Forum Master Companies and PE Master
Companies, “Master Companies”). The RE Master Company is a separate legal entity that acts as
a master vehicle in a “master-feeder” structure, and each RE Master Company will have either or
both a U.S. RE Feeder and a Cayman Islands, Luxembourg or other non-U.S. domiciled RE Feeder
that enable U.S. taxable and U.S. tax-exempt and non-U.S. investors to invest through such RE
Feeders into the RE Master Company. Each RE Master Company may be organized in one of a
number of different jurisdictions, but is commonly organized in the Cayman Islands, Luxembourg
or Delaware. A third-party real estate fund manager (each, a “RE Portfolio Manager”) sponsors
and advises each RE Master Company and manages the assets of such RE Master Company (either
directly or through one or more of its affiliates).
The Real Estate Platform may also enable certain eligible investors to invest via a RE Feeder
alongside a RE Master Company in a specified property or transaction (either directly or through
an investment in another vehicle managed by the RE Portfolio Manager (each, a “RE Co-
investment SPV Vehicle”)).
General
Eligible investors may invest in any combination of HedgeForum Feeders, PE Feeders, PE Co-
investment SPV Vehicles, RE Feeders, and RE Co-investment SPV Vehicles based on their
individual investment needs.
The third-party portfolio managers (“Portfolio Managers”) are selected by Citi Alternatives, which
takes advantage of Citi Alternatives’ experience in manager sourcing, due diligence and risk
management capabilities in evaluating and selecting third-party Portfolio Managers for inclusion
on the relevant Platform (as defined below). In selecting Portfolio Managers, Citi Alternatives
generally will consider various factors as appropriate for the relevant Platform, including, but not
limited to: (i) investment strategy and targeted sectors; (ii) the Portfolio Manager’s investment
team and personnel; (iii) the overall sustainability risk profile of the Portfolio Manager; and (iv)
the track record and transactions done by the Portfolio Manager’s investment team. In respect of
the HedgeForum Platform, Citi Alternatives also considers, among other factors: (i) the HF
Portfolio Managers’ historical ability to generate attractive risk-adjusted returns over time; (ii) the
HF Portfolio Managers’ historical ability to monitor and control risk appropriate to their strategy;
and (iii) the adequacy of the HF Portfolio Managers’ business and operational infrastructure to
support current and future projected assets under management. Within each of these two sets of
broad areas, Citi Alternatives uses an extensive list of issues, questions and metrics designed to
assist it in deciding whether to allow a particular Portfolio Manager onto the relevant Platform.
Interviews with other investors and lenders and verification from independent professionals may
also be undertaken.
Prior to a Feeder being admitted to a Platform, the Master Company and Portfolio Manager must
be approved by an internal investment committee and are also subject to various Citigroup
approval processes. The members of this investment committee include officers of Citi
Alternatives and officers of other Citigroup entities.
Given the illiquid nature of most real estate and private equity funds, once a RE Feeder or PE
Feeder is launched, Citi Alternatives will be responsible primarily for effecting the Feeder’s
investment in the designated Master Company or Co-investment SPV Vehicle as directed by the
Feeder’s governing documents and monitoring the investment during the term. For certain
investments, Citi Alternatives or its delegate may serve as a member of the relevant Master
Company’s limited partner advisory committee or serve in a similar function. The terms of any
such advisory committee or similar function will be disclosed in the relevant Master Company’s
governing documents. Because of the redeemable nature of most hedge funds, Citi Alternatives’
investment advisory role with respect to HedgeForum Feeders includes but is not limited to
ongoing due diligence, performance monitoring, review of adherence to regulatory and investment
guidelines, assessment of the use of leverage and examination of risk management procedures.
Services Provided: Managed Accounts
Citi Alternatives provides investment advice to Managed Accounts that will primarily acquire
interests in HedgeForum Feeders or directly in HedgeForum Master Companies or other funds
advised by HF Portfolio Managers or hedge funds included on the Platforms, although the
Managed Accounts may also acquire interests in private investment funds advised by third-party
managers that are not included on the Platforms (“Non-Platform Funds”). Citi Alternatives
provides such advice either directly to the client or, generally with respect to non-U.S. clients, on
a sub-advisory basis (with a local Citigroup affiliate generally serving as the direct advisor).
The Managed Accounts are managed on a fully discretionary basis (“Discretionary Managed
Accounts”) or a non-discretionary basis (“Non-Discretionary Managed Accounts”). Individual
account agreements will provide for client notice or approval procedures, if any.
With respect to a Discretionary Managed Account, Citi Alternatives and its affiliates will enter
into an advisory agreement and related account opening documents with the client pursuant to
which Citi Alternatives will construct and manage on a discretionary basis the Discretionary
Managed Account. With respect to a Non-Discretionary Managed Account, Citi Alternatives and
its affiliates will enter into an advisory agreement and related account opening documents with a
client pursuant to which Citi Alternatives will provide investment advice relating to private
investment funds and will construct on a non-discretionary basis the Non-Discretionary Managed
Account’s portfolio. Individual agreements may provide for other services to be provided by Citi
Alternatives which may include: overall allocation advice, due diligence services, consolidation
of certain accounts, analytical and reporting services and certain administrative services. Citibank,
N.A. or other Citigroup affiliates or third parties are often retained by the Managed Account clients
or Citi Alternatives to provide administrative, custodial or other services to the Managed Accounts.
In 2015, The Bank of New York Mellon (“BNY”) was appointed to perform certain sub-custodial
and other functions in respect of the Managed Accounts established as of such date and has been
appointed to perform such services for subsequent Managed Accounts.
In constructing a Managed Account portfolio, Citi Alternatives will first consider and assess the
Managed Account client’s financial goals, investment objectives, investment time horizon, risk
tolerance, investment preferences and other considerations deemed appropriate by Citi
Alternatives. Citi Alternatives expects that it will utilize its proprietary asset allocation
methodology and processes to determine strategic allocations for the portfolio. It will also consider
macroeconomic and market factors along
with its qualitative views in both constructing the initial
portfolio as well as providing ongoing monitoring and rebalancing advice. In certain instances,
depending on an individual client’s needs and preferences, Citi Alternatives may construct
portfolios that are either concentrated in terms of strategy or sectors or in terms of the number of
funds. See Item 8 “Methods of Analysis.”
The Managed Accounts program is generally referred to as the “Custom Hedge Fund Portfolios”
program. Citi Alternatives expects in the future to launch a comparable managed account program
that will invest in funds advised by RE Portfolio Managers and PE Portfolio Managers on the
relevant Platforms.
Services Provided: Fund of Hedge Funds
General
Citi Alternatives provides investment advice to Fund of Hedge Funds that are organized to invest
primarily in other hedge funds (“Underlying Hedge Funds”). Citi Alternatives serves as the
investment manager or sub-investment manager of the Fund of Hedge Funds.
The Underlying Hedge Funds will be selected by Citi Alternatives, which takes advantage of Citi
Alternatives’ sourcing, due diligence and risk management capabilities in evaluating and selecting
third-party hedge fund managers for inclusion in the Fund of Hedge Funds’ portfolio. The
Underlying Hedge Funds will be selected based on multiple criteria, including: (i) the Portfolio
Managers’ historical ability to generate attractive risk-adjusted returns over time; (ii) the Portfolio
Managers’ historical ability to monitor and control risk appropriate to their strategy; (iii) the
overall sustainability risk profile of the Portfolio Manager; and (iv) the adequacy of the Portfolio
Managers’ business and operational infrastructure to support current and future projected assets
under management. It is expected that certain of the Portfolio Managers included in a Fund of
Hedge Funds will also be on the HedgeForum Platform. After undergoing Citi Alternatives’ initial
due diligence and approval process, all of the Underlying Hedge Fund Portfolio Managers will be
subject to ongoing monitoring by Citi Alternatives’ investment professionals.
Citi Alternatives will determine the initial allocation among the Underlying Hedge Funds, perform
on-going due diligence on the Underlying Hedge Funds, and regularly rebalance the allocation
among the Underlying Hedge Funds based on, among other factors, the Fund of Hedge Funds’
strategies, investment limitations and investment restrictions as well as Citi Alternatives’
assessment of global market conditions. Citi Alternatives expects that it will utilize its proprietary
asset allocation methodology and processes to determine strategic allocations for each Fund of
Hedge Funds. It will also consider macroeconomic and market factors along with its qualitative
views in both constructing the initial portfolio as well as providing ongoing monitoring and
rebalancing advice. See Item 8 “Methods of Analysis.”
Structure
There are two Fund of Hedge Funds vehicles, one onshore and one offshore, that have been
structured as “umbrella” structures which either issue shares in separate sub-funds or issue interests
in series, depending on the vehicles’ jurisdiction of organization. Each series or sub-fund (each a
“HF Portfolio”) will seek to achieve its own investment objective and policy, have separate rights
and privileges as established in the vehicles’ respective constitutive documents and bear separate
liabilities. Each HF Portfolio will invest substantially all of its assets in Underlying Hedge Funds.
Currently, the onshore vehicle has two active HF Portfolios and the offshore vehicle has three
active HF Portfolios that are operated as fund of hedge funds vehicles, and will accept investors at
a minimum subscription amount of $100,000 for the onshore vehicle and $175,000 for the offshore
vehicle. The minimum subscription amounts may be waived by the HF Portfolios, subject to
applicable law. Additional HF Portfolios are expected to be established in the future.
Each Fund of Hedge Funds vehicle has established, or is also expected to establish, HF Portfolios
that will be customized for, and available for investment by, certain eligible clients of Citigroup
affiliates (“Dedicated Portfolios”). Similar to the Discretionary Managed Accounts, in
constructing a Dedicated Portfolio, Citi Alternatives will first consider and assess, among other
factors, the Dedicated Portfolio client’s financial goals, investment objectives, investment time
horizon, risk tolerance, investment preferences and other factors deemed appropriate by Citi
Alternatives. Citi Alternatives expects that it will utilize its proprietary asset allocation
methodology and processes to determine strategic allocations for the Dedicated Portfolios. It will
also consider macroeconomic and market factors along with its qualitative views in both
constructing the initial portfolio as well as providing ongoing monitoring and rebalancing advice.
See Item 8 “Methods of Analysis.”
Dedicated Portfolios may be referred to as part of the “Custom Hedge Fund Portfolios” platform.
Citi Alternatives currently serves as a sub-advisor to fund of hedge funds vehicles established,
sponsored and/or advised by a third party and may in the future serve as a sub-advisor to additional
such fund of hedge funds vehicles, including vehicles investing in insurance and other sectors. Citi
Alternatives utilizes substantially similar investment management, due diligence and risk
management processes described above for such sub-advised fund of funds vehicles as it does for
the Fund of Hedge Funds.
Services Provided: Fund of Private Equity/Real Estate Funds
General
Citi Alternatives provides investment advice to Fund of PERE Funds that are organized to invest
primarily in a portfolio of other private equity or real estate funds and co-investment opportunities.
Such investments include within a Fund of PERE Funds: PE Feeders or PE Master Companies on
the Private Equity Platform; RE Feeders or RE Master Companies on the Real Estate Platform;
and related co-investment vehicles (collectively, “Underlying PERE Funds”). Citi Alternatives
serves as the investment manager or sub-investment manager of the Fund of PERE Funds.
Citi Alternatives will determine the initial allocation among the Underlying PERE Funds based on
the criteria set forth in the relevant fund governing documents.
Structure
Currently, there are seven Fund of PERE Funds and each invests substantially all of its assets in
Underlying PERE Funds. These Fund of PERE Funds will generally accept investors at a minimum
subscription amount of $250,000. The minimum subscription amounts may be waived by the Fund
of PERE Funds, subject to applicable law.
In addition, there is currently one Fund of PERE Funds vehicle that is structured as an “umbrella”
vehicle, which issues shares in separate sub-funds. Each sub-fund (each a “PERE Portfolio”) will
seek to achieve its own investment objective and policy, have separate rights and privileges as
established in the vehicles’ respective constitutive documents and bear separate liabilities. Each
PERE Portfolio will invest substantially all of its assets in Underlying PERE Funds either directly
or through a PE Feeder, RE Feeder or another Fund of PERE Funds vehicle. This umbrella
structure currently has three PERE Portfolios which consist of Custom PERE Portfolios as defined
below and two Funds of PERE Fund. Minimum investment for each PERE Portfolio is
$10,000,000. There are currently two sub-funds within this vehicle structured as feeders (i.e., each
of these sub-funds is allocated to a specified PE Master Company) and it is expected that additional
future sub-funds within this vehicle will be structured as feeders (i.e., allocated to a specified PE
Master Company or RE Master Company) or Fund of PERE Funds.
Certain PERE Portfolios may be created for individual clients of Citigroup affiliates or related
groups of investors and would be managed on a more customized basis in accordance with those
clients’ and/or investors’ particular objectives (“Custom PERE Portfolios”).
Additional Fund of PERE Funds and PERE Portfolios are expected to be established in the future.
Services Provided: Co-Investment Funds
General
Citi Alternatives provides investment advice to Co-Investment Funds that are each organized to
invest in a diversified portfolio of private equity and real estate co-investments (“Co-
Investments”). Each Co-Investment Fund’s portfolio is anticipated to include investments in single
asset co-investment vehicles and is expected to be diversified as provided in the Co-Investment
Funds’ governing documents, including by underlying investment group, geography, strategy and
sector. Co-Investments in which the Co-Investment Funds are expected to invest will focus on
strategies that include, but are not limited to, buyouts, growth, venture, structured credit,
mezzanine, infrastructure, distressed/turnarounds, core real estate, value-add real estate, and
opportunistic real estate.
It is expected that the Co-Investments will be sourced from Portfolio Managers on the Platforms,
thus leveraging Citi Alternatives’ experience in manager sourcing, due diligence and risk
management capabilities in evaluating and selecting third party Portfolio Managers and the related
Co-Investments.
Co-investments will be selected based on Citi Alternatives’ detailed qualitative and quantitative
analysis of the investment merits of a selected opportunity in addition to the analysis that is
performed on respective Portfolio Manager when they were onboarded to the Platform, the
characteristics and diversification of existing investments, the desired pace of deployment of
capital and the expected pipeline of investment opportunities and any investment limitations and
investment restrictions of the Co-Investment Fund.
Citi Alternatives serves as the investment manager of the Co-Investment Funds and will determine
the allocation among the Co-Investments based on the criteria set forth in the relevant fund
governing documents.
Structure
Currently, there are two Co-Investment Funds expected to be launched on or around the second
quarter of 2024, and each is expected to invest substantially all of its assets in Co-Investments.
These Co-Investment Funds will generally accept investors at a minimum subscription amount of
$250,000. The minimum subscription amounts may be waived by the Co-Investment Funds,
subject to applicable law.
Additional Co-Investment Funds are expected to be established in the future.
Services Provided: Portfolio Diagnostic Reviews
Citi Alternatives provides investment portfolio analysis (a “Portfolio Diagnostic Review”) on a
non-fee basis to certain select clients of Citigroup affiliates. A Portfolio Diagnostic Review is
performed by Citi Alternatives for an individual client to provide them with a better understanding
of their alternative fund holdings and portfolio construction issues. Citi Alternatives will evaluate
a client’s portfolio for, among other things, diversification, liquidity and allocation of investment
strategies. Citi Alternatives’ evaluation of the client’s portfolio is based on the data provided by
the client on existing alternative fund holdings. Citi Alternatives only provides information with
respect to the client’s portfolios, and clients are solely responsible for all investment decisions
relating to the client’s portfolios. After receiving a Portfolio Diagnostic Review, clients may decide
to invest in one or more Feeders, Funds of Funds or Co-Investment Funds; invest in a Dedicated
Portfolio; or retain Citi Alternatives to advise a Managed Account for the client. See Item 8
“Methods of Analysis.”
Definitions
The term “Feeder” includes a HedgeForum Feeder, a PE Feeder, and a RE Feeder. The term
“Master Company” includes a HedgeForum Master Company, a PE Master Company and a RE
Master Company. The term “Underlying Fund” includes, where applicable, a HedgeForum Master
Company, a PE Master Company, a PE Co-investment SPV Vehicle, a RE Master Company, a RE
Co-investment SPV Vehicle, a Co-Investment, an Underlying Hedge Fund and an Underlying
PERE Fund. The term “Platforms” includes the HedgeForum Platform, hedge funds considered as
part of the Citi Wealth Investments – Alternatives platform and available as a fund investment in
Managed Accounts, Fund of Hedge Funds or Co-Investment Funds, the Private Equity Platform
and the Real Estate Platform. The term “Portfolio Manager” includes an HF Portfolio Manager, a
PE Portfolio Manager and a RE Portfolio Manager or portfolio manager of an Underlying Hedge
Fund, Underlying PERE Fund or Co-Investment. The term “Co-investment SPV Vehicle” includes
any PE Co-investment SPV Vehicle or RE Co-investment SPV Vehicle as applicable. The term
“Fund(s) of Funds” includes the Fund(s) of Hedge Funds and the Fund(s) of PERE Funds (as well
as the Custom PERE Portfolios part of the Fund of PERE Funds structure).
Particular Investment Restrictions
Individual investors in the Feeders, the Fund of Funds and Co-Investment Funds are not consulted
in the design or implementation of investment programs. Each Feeder’s account documentation
will describe such Feeder’s investment program and will identify the respective Master Company.
Each Fund of Funds’, Co-Investment Fund’s and Dedicated Portfolio’s account documentation
will describe its investment program and any related investment restrictions.
With respect to Managed Accounts, each advisory agreement and related account documentation
will specify the particular investment program and any related investment restrictions. It is
expected that in general each Managed Account and each Dedicated Portfolio will be customized
to reflect a particular investor profile. An investor profile generally addresses existing investments,
income preferences, liquidity preferences, investment time horizon, investment objectives, risk
tolerance and investment experience.
Wrap Fee Programs
Citi Alternatives does not participate in wrap fee programs.
Assets Under Management
As of December 31, 2023, Citi Alternatives managed $20,590,054,868 of discretionary assets and
$24,101,863 of non-discretionary assets. The discretionary assets consisted of (i) Feeders on the
HedgeForum Platform and special purpose vehicles related to the HedgeForum Platform; (ii)
Feeders in the Private Equity Platform; (iii) Feeders in the Real Estate Platform; (iv) two Funds of
Hedge Funds consisting collectively of multiple portfolios (including Dedicated Portfolios), (v)
eight Funds of PERE Funds (including Custom PERE Portfolios); and (vi) advisory contracts for
Discretionary Managed Accounts. Citi Alternatives managed six advisory contracts for Non-
Discretionary Managed Accounts during 2023.