Citigroup
When Norilsk Nickel of Russia wanted to buy a 20% stake in Gold Fields of South Africa from Anglo American and needed to raise $800 million at short notice, it got help from an unexpected quarter: the bank that was advising the seller, Citigroup. Citigroup had identified Norilsk to Anglo as a potential buyer of the $1.2 billion stake and, after asking permission from its client to approach the Russian company to offer help in arranging finance, rushed to raise the loan to fund the purchase in a matter of days.
Citigroup managed all the complex cash-management aspects of the deal, which required delivering rand proceeds in South Africa. It pulled the whole thing together in 96 hours, so preserving confidentiality for the client. In the process it acted as sole arranger on the largest unsecured syndicated loan ever for a Russian corporation.
So when Atiq ur Rehman was promoted from head of loans for Citigroup in emerging Europe to lead Citigroup?s global emerging-market bond and loan origination effort, he knew a thing or two about the bank?s ability to pull together structuring and product skills and apply them for customers operating in countries very far apart.
Citigroup is the world?s leading bond market underwriter and the second ranked arranger of global syndicated loans. Emerging-market financing requires both. ?Norilsk Nickel was never going to raise $800 million from the bond market in three days,? says Rehman. ?We?re providing advice, hedging, loans and capital markets take-out. A pure investment bank that does not have the capability in loans can find itself at a disadvantage. The ability to be aggressive on the balance sheet gives comfort to clients who tend to demand hard underwriting as part of your commitment.? It?s part of the integrated approach by which Citigroup seeks to distinguish itself. Rehman says: ?We encourage all our transactors in any deal to look at the complete solution for the client.?
Of course it?s a model that most of the big universal banks are now following. Citigroup has another competitive advantage. Rehman says: ?Name just about any country and there?s a Citigroup office there to help put together a solution for a client?s problem.? The group can point to landmark deals in the past 12 months for the Republic of Korea and Hutchison Whampoa in Asia, for LUKoil and others in Russia and emerging Europe, and for Enersis and Endesa and the Republic of Uruguay in Latin America, to name just a few.
The geographic spread of business and the capability across a range of products gives comfort to Rehman that the business can ride out uncertainties like the recent emerging-bond market sell-off over fears about US interest rate rises. He says: ?There may be less business on the bond side in Latin America because of interest rate worries but it?s very active on the loan side. The Middle East has been very much a bank loan markets and it?s flush with liquidity now because of the oil price but there?s now a great deal of interest in getting credit ratings and doing long-dated international bonds so as to reduce dependence on the loan market.?
He continues: ?In Asia, we have continued to do deals from Korea, Singapore and Malaysia. There?ll be a lot of activity with financial sponsors in leveraged finance. For example we?ve recently completed a $500 million equivalent leveraged recapitalization for Taiwan Broadband, which is owned by Carlyle.?
