Citi's private equity club ends due to underperformance

Citigroup Inc.'s attempt to connect wealthy clients with private equity investments through the Silverfern Equity Club has ended in disappointment. The initiative began in 2012, aiming to provide exclusive investment opportunities to elite clients by partnering with Silverfern Group. However, the project has faced significant challenges and legal disputes. After initial enthusiasm, tensions arose between Citi and Silverfern. By 2016, Citi bankers expressed concerns about underwhelming investment performances, leading to customer complaints. The club ultimately closed, and conflicts turned into lawsuits. Recently, a New York judge ruled in favor of Citi, stating that Silverfern owed millions in unpaid fees. Silverfern is currently appealing the decision. Despite this setback, banks like Citi continue to seek access to private markets as a way to attract wealthy clients. The Silverfern Equity Club was one of the early efforts to tap into this lucrative market, signing up 39 of Citi's richest clients with total commitments of $470 million. Citi and Silverfern's relationship soured over differing approaches to investment. While Citi wanted to offer clients a variety of opportunities, Silverfern preferred a more structured model. As dissatisfaction grew, the club's performance declined, and many members invested less than initially promised. By 2018, Silverfern stopped paying Citi its share of fees. A key issue arose when Citi distanced itself from Silverfern, leading clients to lose confidence in the smaller partner. This result has left both parties in a contentious legal battle and has led Citi to reevaluate its approach to private equity investments.