A barnstorming year in primary equity markets and M&A advisory, combined with consistent and comprehensive debt capital markets coverage, earn Citi the award for the region’s best investment bank.
As capital markets surged back to life last year after the initial pandemic shutdown, Citi quickly emerged as the leading figure in the equity market revival in CEE.
A clutch of secondary deals from Polish retailer CCC, Russian miner Polymetal and energy firm OMV Petrom – the first equity capital markets transaction from Romania in two and a half years – were the precursor to a bumper autumn and winter in the IPO market as investor appetite for high-growth, pandemic-proof investment stories prompted a spate of blockbuster listings from across the region.
Citi was the only bank to snag mandates on every one of these, from Allegro’s $2.7 billion IPO in September to listings for Kazakh lender Kaspi ($1 billion), Russian online retailer Ozon ($1.1 billion), Polish parcel locker firm InPost ($3.4 billion) and Russian discount retailer Fix Price ($1.8 billion).
Ken Robins, head of Europe, Middle East and Africa (EMEA) ECM, attributes Citi’s success to strong emerging market distribution combined with comprehensive sector coverage and an on-the-ground presence in 10 countries from Poland to Kazakhstan.
“Another differentiating factor is that we lead a lot of our IPOs through our syndicate desk more than our sales franchise,” he adds. “That gives us the ability to have in-depth conversations with the key portfolio managers and get them locked in before we even go to the public phase of the transaction.”
The InPost IPO also highlighted the advantages of Citi’s broad investment banking capabilities and holistic approach to client coverage. The US house took an outsize share of the fees for the listing, reflecting its role as the only bank on the M&A part of the dual-track process, and also used its local balance sheet to lead the Zl2.75 billion ($726.5 million) pre-IPO financing.
In further testament to the strength of Citi’s relationship with the firm, the bank subsequently advised on InPost’s $674 million acquisition of France’s Mondial Relay in March.
The announcement came at the end of an impressive 12-month run in which Citi notched a 22% share of the M&A advisory market in CEE.
Again, the bank’s reach extended across the region, with high-profile mandates for the likes of Poland’s PKN Orlen, Hungary’s Mol Group, Infobip in Croatia and Kazminerals in Kazakhstan, as well as on a clutch of Russian deals, including Highland Gold’s $1.7 billion acquisition of Fortiana Holdings, the $2.1 billion sale of steel pipe manufacturer Chelpipe and Evraz’s consolidation of its metallurgical coal businesses.
Citi even managed to find lucrative work in the lacklustre Turkish market: acting for Russian investment group Letter One on its acquisition of a controlling stake in Turkcell; for long-standing client Oyak on the purchase of Likitgaz; and for the sellers of the parent company of gas distributor Enerya.
On the DCM side, Citi lagged arch rival JPMorgan in the awards period but was still well ahead of the chasing pack with 42 deals for a total allocation value of $12 billion, according to Dealogic.
These deals again reflected Citi’s pan-regional coverage, with transactions for borrowers in Albania, Belarus and Uzbekistan, as well as the larger and more mature markets in the region. Citi’s client list also spanned the full spectrum of issuers, from sovereigns to high-yield corporates, while structures included a variety of environmental, social and governance (ESG)-labelled bonds.
Theo Giatrakos, head of Citi’s alternative assets group in EMEA, also stresses that Citi’s regional network in CEE played a central role in its investment banking success in the awards period, particularly in the early months of the pandemic.
“Our boots on the ground were crucial during the hardest part of Covid,” he says. “But even when we had turned a corner by the summer and we were being deluged with RFPs [requests for proposal], having people on the ground and being close to the client made a big difference.”
The depth and longevity of Citi’s relationships in the region also gave the firm an edge during the transition to virtual working. As Marzena Fick, head of CEE DCM, puts it: “I’ve been covering this market for 15 years, so I know a lot of our clients in person. It’s much easier to have a conversation electronically when you know people well rather than if you have to pitch cold over Zoom.”
Finally, the other piece in Citi’s offering is its ability and willingness to put balance sheet to work in the region, both through its local subsidiaries and from western European. Giatrakos points to the acquisition in November by Macquarie Infrastructure and Real Assets (MIRA) of Cez Group’s assets in Romania, where Citi acted as sole financial adviser to MIRA and also provided acquisition finance support.
As he notes, a few years ago Romania would have been off the radar for most global infrastructure investors. “But being able to call on someone like Citi, who can provide quality advice, who understands the country, and who can also structure financing and provide balance sheet is an extremely powerful combination,” he says.
