According to the investment bank, StepStone will be responsible for management and providing advisory services to the CPE businesses and their $4 billion fund of funds.
Some of Citiâs proprietary trading capital investments will be acquired by Lexington while it will also oversee those businesses concerned with making investments.
Financial terms of the deal, which is due to be completed during the fourth quarter of 2010, have yet to be announced.
However, the transaction is expected to reduce the amount of GAAP assets within Citi Holdings by $1.1 billion.
Mark Mason, chief operating officer of the Citi Holdings segment at Citi, said: âCiti has an established and successful relationship with StepStone, and Lexington is a highly regarded co-investment manager in the industry.
âWe believe the combination of StepStone, Lexington and the CPE team are well qualified to manage these assets.â
The investment bank added that the move is in line with its current strategy to divest itself of ânon-core assetsâ.
Meanwhile, Citigroup was recently awarded 13 awards, including the accolade of Best Global Transaction Banking House, at the Euromoney Awards for Excellence.
By Jim Ottewill