Citigroup to buy Bisys Group

Citigroup Inc. said Wednesday that it had agreed to pay $1.47 billion for Bisys Group Inc., which provides accounting and administrative services to hedge funds and private equity firms.

The acquisition of Roseland, N.J.-based Bisys could help Citigroup, the biggest U.S. bank, compete against rivals such as JPMorgan Chase & Co. in serving alternative-asset managers, including hedge funds, the fastest-growing part of the investment industry.

Bisys serves 1,200 hedge funds, 400 private equity funds and 80 mutual funds. Citigroup plans to sell Bisys’ retirement and insurance units to buyout firm J.C. Flowers & Co., cutting Citigroup’s cost to $800 million.

Managers of hedge funds are seeking more services as investors and lawmakers demand greater oversight of the sector.

Under the deal, Bisys investors would receive $12 a share, including a 15-cent dividend. Citigroup shares rose 10 cents Wednesday to $54.30, while Bisys climbed 24 cents to $11.71.