Sovereign Wealth Funds: A Growing Global Force February 22, 2008 François Bujon de l’Estang Chairman, Citi France

Sovereign Wealth Funds: A Growing Global Force Sovereign Wealth Funds (“SWFs”) are a prominent investor class with their assets rivaling Global Hedge Funds and Private Equity combined Not all SWFs are created equal as they lie along a spectrum of risk appetite SWFs are hiring best-in-class investment talent to serve long-term investment goals Governments are weighing perceived threats of SWFs against potential benefits. Managing political risk in SWF-related transactions is key Citi is playing a central role in the intermediation of these capital flows. 1

SWFs are Big and Getting Bigger Global Financial Assets ($ T) 2

SWFs: Increasingly Relevant * * ADIA. Assets Under Management ($ b) 3

Warnock Model (1) Warnock Model (2) Foreign Inflows Keep Treasury Yields Low McKinsey estimates that annual net foreign purchases lowered long rates by 130 basis points Source: McKinsey Global Institute: “The New Power Brokers: How Oil, Asia, Hedge Funds and Private Equity are Shaping Global Capital Markets,” Oct Warnock and Warnock: “International Capital Flows and US Interest Rates,” NBER 12560, Oct Impact of Foreign Capital Flows on US 10-year Treasury Yield (bps)

SWFs are in Increasingly High Profile Transactions $9.75 b, Dec 07 $7.5 b, Nov 07 $5.19 b, Aug 07 China Investment Corp $5.00 b, Dec 07 $6.88 b, Jan 08 * * Total Fund raising of $12.5 b included investments from KIA, Capital Research Global Inv., Capital World Inv., NJ Div. of Inv. China Investment Corp $3.00 b, May 07$4.40 b, Dec 07 $8.83 b, Nov 05 5

Recapitalizing the Financial Service Industry Source: Dow Jones Newswire. Total Investments by SWFs ($ b) $42.9 $24.0 $1.4 $19.2 $42.6 $44.6 $66.6 $20.6 Investments in Other Industries Investments in Financial Services 63.8% of Total 93.3% of Total $ % of Total 6

Where the Wealth is Coming From Where the wealth is coming from and how will it grow? Surge in commodity prices Dramatic increase in current account surpluses in Asia Willingness of governments to allocate more funds from Foreign Exchange Reserves to Sovereign Wealth Funds 2007 $3.0 trillion 2012 $7.5 - $10.0 trillion Global Foreign Exchange Reserves ($ b) 7

Commodity Producing Countries Generate Investment Assets At oil prices of $100/barrel, there is an incremental $2.3 b petrodollar investment into the world markets per day. Source: McKinsey Global Institute: “The New Power Brokers: How Oil, Asia, Hedge Funds and Private Equity are Shaping Global Capital Markets,” Oct Warnock and Warnock: “International Capital Flows and US Interest Rates,” NBER 12560, Oct Petrodollar Foreign Investment Assets $8.51 $6.93 $5.88 $4.83 EstimatedForecast Oil Price $100 Oil Price $70 Oil Price $50 Oil Price $30 Scenarios CAGR ( ) 17% 6%6% 10% 13% $3.40 $3.91 $8.51 ($ T) 8

SWFs: Not a New Concept 1950’s Today KIA $250 b, 1953 (Kuwait) Temasek $108 b, 1974 (Singapore) ADIA $875 b, 1976 (UAE) GIC $200 b, 1981 (Singapore) Brunei Inv. Authority $30 b, 1983 (Brunei) Norway Govt. Pen. Fund $328 b, 1990 (Norway) Khazanah Nasional BHD $18 b, 1993 (Malaysia) QIA $60 b, 2005 (Qatar) KIC $20 b, 2005 (Korea) Future Fund $42 b, 2006 (Australia) CIC $200 b, 2007 (China) LIA $40 b, 2007 (Libya) Stabilization Fund $200 b, 2004 (Russia) Saudi Arabian Funds $250 b, 2007 (Saudi Arabia) 9

Central Banks/ Monetary Authorities Sovereign Saving Funds Sovereign Stabilization Funds Affiliated Corporate Entities / SOEs Government Investment Corporations China Japan India Hong Kong Saudi Arabia Russian Oil Stabilization Fund Algerian Revenue Regulation Fund Chilean Economic and Social Stabilization Fund Abu Dhabi Investment Authority Norway Government Pension Fund Kuwait Investment Authority China Investment Corporation Temasek Qatar Investment Authority Gazprom SABIC Abu Dhabi National Energy Company China National Offshore Oil Corp. Mubadala Development Company Dubai International Capital Dubai World SAGIA GIC Where Is Sovereign Wealth Managed? Note: Some central banks and monetary authorities, such as the Saudi Arabia Monetary Authority, may not only manage official foreign-exchange reserves, but other foreign assets as well. Source: Citi. Temasek Qatar Investment Authority 10

Activity Is Moving to the Aggressive End of the Spectrum Source: Citi. Stabilization Risk Tolerance Investment Objective Examples Cash / Gov’t Bonds Fixed IncomeEquity Strategic Stake Building Real Estate Hedge Funds Private Equity Leveraged Buyouts Russian Stabilization Fund Norwegian Government Pension Fund Abu Dhabi Investment Authority Kuwait Investment Authority Temasek Qatar Investment Authority Low Wealth Accumulation High 11

SWF Capital Can Reshape Global Economic Landscape Scenario A: Allocation of Incremental SWF Capital Growing Disparity in Western and EM Economic Growth Scenario B: Allocation of Incremental SWF Capital Estimated Impact on GDP Growth Note: Estimates of SWF capital inflow effects based on historical relationship between GDP growth and FDI, as estimated by Carkovic and Levine (2005), “Does Foreign Direct Investment Accelerate Economic Growth?”. 75% 25% 37% 19% 25% 12

SWF Strategic Implications for Citi Clients Key investors in IPO or pre-IPO financing Source of capital for transformative transaction Strategic partnerships can smooth regulatory approval, mitigate political risks Core Shareholder with long term investment focus Competition for assets Support for national champions Political Implications Franchise Impact SWF Benefits for Citi’s Clients Large, liquid funds with the ability to quickly close transactions Supportive source of funding for potential acquisitions Core investors with a long-term horizon bring added stability to shareholder base Typically utilize low leverage levels in their investments Business Opportunities for Citi Intermediary between SWFs and global corporations Advisory and financing 13

Governments Are Weighing Their Response to SWFs Perceived Threats ▼Transparency ▼Political ambitions / security concerns ▼Reversal of 25 years of privatization ▼Potential for reciprocity / restricted market access Potential Benefits ▲Long-term investment horizon ▲Low leverage ▲Key source of foreign financing ▲May facilitate future investment in key emerging markets Managing political risk has become essential in SWF-related transactions. In light of the importance of these issues for global policymakers, one can expect continued public discussion about the need for international consensus on “best practice”. 14