Citigroup gets big bucks

Citigroup (NYSE: C) is about to raise $14 billion, but the press is a bit unclear about who is putting in the money.

The Wall Street Journal reports that Prince Alwaleed bin Talal, currently one of Citi's largest investors, will put in capital along with the China Development Bank. The CDB piece is probably $2 billion.

According to the FT.com "Under the proposal being discussed, the bulk of the money -- roughly $9bn -- would be most likely to come from China, people familiar with the negotiations say. The Kuwait Investment Authority would contribute about $1bn, while $2bn to $4bn would be raised through a public placement of shares."

Leaving aside the fact that two big newspapers have different accounts of the same news, Citigroup may be faced with a challenge from Congress over whether it is OK for such a large U.S. financial institution to have big blocks of its stock owned by foreign entities. Citi's role in lending, underwriting, and trading might be considered "strategic" by the U.S. government.

To investors, that matter of who owns what is hardly important. The big bank's market cap is down to $142 billion. Another $10 billion is significant dilution. In theory, it could push the Citi shares from $29 to $25 of below. The shares have a 52-week high of $55.55.

If the federal government is against having investors from overseas, the Fed should lend Citi $10 billion on its own.

Douglas A. McIntyre is an editor at 247wallst.com.