Awards for Excellence 2020
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Another brisk year of M&A deal flow in CEE produced a clear winner on the advisory side. The best bank for advisory, Citi, dominated Dealogic’s league tables for the 12 months to the end of March, acting on 17 deals worth $17.7 billion, versus just $9.5 billion for its nearest rival.
The tally included the largest acquisition in the history of Russian retail, the largest Chinese investment in Turkish infrastructure and a series of ground-breaking transactions in central and southeastern Europe (CESEE).
Irackly Mtibelishvily, chairman of CEEMEA CIB, says Citi’s success in Russia – which accounted for more than 40% of the bank’s M&A credit during the awards period – was partly down to timing.
“Sometimes you have years when instead of 25% of your projects maturing, 90% do, which is what happened with us in Russia last year,” he says. “But clearly this is not just luck, it’s all about consistency and client relationships.”
The standout deal in Russia was the $3.2 billion acquisition of hypermarket chain Lenta by Alexey Mordashov’s Severgroup in April 2019.
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Theo Giatrakos |
Citi acted as exclusive financial adviser to Severgroup on the transaction, which involved the private purchase of a 42% stake from TPG and the European Bank for Reconstruction and Development, followed by a mandatory takeover bid for the rest of the company.
The US house also notched an exclusive advisory mandate on Rostelecom’s $2.1 billion takeover of Tele2, which was announced in March this year, as well as advising Finland’s Neste Oyj on the sale of its long-established fuel retail business in Russia to Tatneft.
In Turkey, where Citi also has a local investment banking team, notable mandates included advising regular client Oyak, the Turkish army pension fund, on the acquisition of Total Oil and M Oil, and acting as sell-side adviser on the sale of a 51% stake in ICA, the concessionaire of the Third Bosphorus Bridge and the Northern Marmara Motorway in Istanbul, to China Merchants Expressway.
Mtibelishvily says having execution teams on the ground has been key to Citi’s success in Turkey and Russia: “Many of these deals were driven locally where we have presence and the level of trust our clients give us is enormous.”
Citi also boasts commercial banking operations in eight other markets in CEE, including the four Visegrad countries, Romania, Bulgaria, Kazakhstan and Ukraine.
Network
This physical network also helps to support its investment banking franchise in CESEE, where the US house advised on a series of landmark deals in the awards period.
These included buy-side mandates for state-controlled energy firms PKN Orlen and MOL Group, both on deals worth more than $1.5 billion, as well as the purchase of Slovenian lender Abanka by larger rival NKBM, owned by Citi client Apollo Global Management.
Citi also demonstrated its reach among the financial sponsor community with a buy-side advisory role on the purchase of Bulgarian telco Vivacom by BC Partners’ United Group. By contrast, it was on the other side of the fence in the sale of Czech online travel firm Kiwi.com to General Atlantic, building on a relationship that began in Citi’s commercial bank in 2015.
The US house also played a pivotal role in the largest deal in CESEE in the awards period, the €2 billion voluntary tender offer by Czech Republic’s Sazka Group for Greek gaming company Opap. Citi not only acted as sole financial adviser to Sazka Group but was also a lead bank on the financing package.
“The Sazka Group deal demonstrated the strength of our BCMA [banking, capital markets and advisory] connectivity and our ability to structure a very complex financing package, while at the same time providing M&A advice to our client,” says Theo Giatrakos, head of investment banking central and south east Europe.
He adds that says Citi’s ability to lead and structure complex packages is what differentiates the bank from a financing perspective.
“There is a lot of domestic liquidity in some CEE markets, and there is appetite from local banks to take on risk,” he says. “But where Citi can add differentiated value is in structuring and actually fronting those financing packages.”
