The world’s best investment bank in the emerging markets 2021: Citi
The US bank has turned pandemic-inspired strategic conversations with companies into mandates.
When the vaccine alliance Gavi was putting together its team with the World Health Organization and the Coalition for Epidemic Preparedness Innovations, it asked Citi to advise it on the financial aspects of buying and deploying more than two billion vaccines throughout the emerging markets.
That was in November 2020 and Citi is still the financial adviser for Gavi’s Covax Facility, the global procurement mechanism for Covid-19 vaccines. The 27-strong team finds risk mitigation and execution strategies in connection with the Covax facility, including supporting the building of strategies to implement and maintain the facility.
It’s important work and Jan Metzger, Citi’s banking, capital markets and advisory head for Asia Pacific, says the bank’s physical reach was critical in making it Gavi’s obvious partner. Citi likes to tout its physical breadth and although new chief executive Jane Fraser is adopting a similar geographical rationalization strategy to the one she implemented when head of the bank’s Latin American operations, the bank’s footprint is still unrivalled.
That presence has also been hugely valuable to Citi’s private-sector clients during the pandemic, says Metzger. “We have people on the ground in places like Sri Lanka, Bangladesh, Thailand, where there’s literally no other major international bank present. We have huge multinational clients that are running into unique problems. Having a Citi banker that may not be the subject matter expert but is able to show up in the room, has been hugely beneficial.”
But Citi has also innovated. Its roadshow for Malaysia’s $6 billion bond deal on April 14, 2020 was the first to be run completely virtually. It was the issuer’s first bond for five years and, particularly given the spectre of Covid, it required a heavy marketing effort. Its bond prospectus proved a successful template.
Eduardo Cruz, banking, capital markets and advisory head for Latin America, says the bank’s Asian operations helped Citi prepare clients in other emerging markets for the wave that was about to hit. The Citi team not only worked closely with corporates to build liquidity before the markets’ volatility spiked but also embedded the bank operationally into many companies.
“We were helping clients readjust their supply chains because supply chain flexibility became a very, very important issue just when a huge amount of geopolitical complexity was being put into the mix,” says Cruz.
Senior Citi bankers throughout the emerging markets report being involved in an unprecedented amount of C-suite conference calls. That spike in chief executive and CFO interactions paid off and put the bank in prime position for the capital markets and other financing mandates that followed.
Citi’s investment banking revenues throughout the emerging markets have seen impressive growth so far in 2021 and the bank has been capitalizing on the spike in equity issuance that has been a recent feature in these markets.
Citi’s high-profile presence in tech IPOs has been an important factor. Metzger says he expects the strong run of mandates taking tech companies public will endure for years – and points to a pipeline of companies such as WeDoctor, China’s virtual medical consultancy company. Outside China, India has seen soaring issuance of IPOs and in Brazil the rotation out of fixed income saw a seemingly unending supply of companies coming to the public markets – deal flow that Citi has been successful in capturing.
Supply chain flexibility became a very, very important issue just when a huge amount of geopolitical complexity was being put into the mix
In the Middle East, Citi captured the lion’s share of a busy special purpose acquisition company pipeline and dominated M&A. In central and eastern Europe it proved it’s still plugged into the traditional industries too, with key mandates in energy, metals and mining.
While tech companies throughout the emerging markets were enjoying extraordinary growth, commodity companies saw a slump in demand and prices, providing the bank with a different financing challenge. The bank secured vital equity financing for companies like Russian miner Polymetal and Romanian energy firm OMV Petrom. In this region, as elsewhere, Citi leveraged its physical presence to get involved in the strategic response to the pandemic, which ultimately created financing mandates.
Goldman Sachs also had a strong investment banking year in the emerging markets, with a resurgent performance in Asia, particularly in the region’s core market of China. Meanwhile Standard Chartered continues to deepen its market share on its bet for growing south-south trade, particularly that between Asia and Africa. While those volumes and associated financing mandates have taken a step back in the past year, the bank looks well set to capitalize on a snap-back in trade and financial flows.