According to sources cited in reports, under the terms of the deal ex-Goldman Sachs money manager Vikram Pandit, who now manages the fund, would become head of Citigroup Alternative Investments.
Meanwhile, Citigroup is also expected to bolster Old Lane's assets under management by $4 billion, taking its total to $8 billion.
It is thought that the fact that Old Lane has considerable interests in India has made the fund especially attractive to Citigroup, which has recently outlined plans to expand heavily in fast-growing market.
News of the mooted acquisition of Old Lane comes on the day that Citigroup chief executive Charles O Prince is expected to announce plans to cut the company's operating costs, with speculation that up to 17,000 jobs may be lost in the restructuring.
In its inaugural year, Old Lane returned around ten per cent to its investors, on revenue of $150-160 million.