Awards for Excellence 2018
|Who you gonna call? How|
Citi became clients’ go-to
global investment bank
|Bank of America Merrill Lynch|
|View full 2018 results|
A global platform needs global activity to prove its mettle. With growth ticking up in developed and emerging markets, alongside a return of volatility in early 2018, the need and opportunity was there for a firm like Citi to finance clients in markets around the world.
“This was a year that really played to Citi’s strengths,” says Tyler Dickson, global head of capital markets origination at Citi. “It was the first period in recent history with truly global synchronized growth, and while clients’ access to capital remained as complex as ever, Citi’s unique presence helped them find different pools of capital to address their financing needs.”
A few things have helped Citi get to this point. It has retained a large part of its global network despite the stresses of the financial crisis, while regulatory aversion to financial institution consolidation since the crisis helped stymie the creation of new global competitors.
Traditional competitors have retrenched to home countries or regions and have often slashed their product suites. The biggest firms of Chinese banking – which might have the potential to build networks with outposts across the world – have yet to emerge from their domestic markets in any coordinated way.
All of this has led to an environment in which Citi has excelled. In debt capital markets, the bank was top in the global rankings for the period under review, according to Dealogic, with top rankings also in financial institutions and sovereigns, supranationals and agencies deals. It ranked third in syndicated loans, with a leaning towards investment-grade credits, where it also ranked third. In equity capital markets, it topped the global rankings for IPOs.
It was in the connectivity that it could deploy for clients – both geographically and in product – where Citi shone. Its financing of the $24 billion merger of Bard and Becton Dickinson saw it lead a $10 billion bond and a $5 billion equity and convertible deal. Another example of being a driving force behind strategic growth was its work for the acquisition of Fidelis Care New York by Centene Corporation for $3.75 billion. The financing comprised a marketed follow-on equity offering of $2.9 billion, a $1.8 billion sale of senior unsecured notes and a $3.75 billion bridge.
Both deals showed the bank putting to work the full range of its expertise and distribution power to help companies make the most of external growth opportunities.
Citi was active in all the other key themes of the period – ones fostered by a climate of broad growth, like pre-IPO financings, carve-outs, jumbo M&A financings and infrastructure finance. But it was in cross-border deals where the bank’s strengths and flexibility were shown most clearly.
“While clients’ access to capital remained as complex as ever this year, Citi’s unique presence helped them find different pools of capital to address their financing needs”- Tyler Dickson
South African media company Naspers was being valued at a substantial discount even when just looking at its 33% stake in Tencent. The sale of a 2% stake in March 2018 for over $10 billion was the largest follow-on offer of secondary shares that was not a government disposal. It was also the largest cross-border ECM deal since 2014 – and an example of how Citi has helped old economy firms leverage the value of new economy opportunities. The bank was joint global coordinator on the deal, which required the deployment of expertise from its South Africa, Hong Kong and New York desks.
In DCM, Citi’s joint bookrunning mandate for British American Tobacco saw it complete a $17.25 billion financing made up of eight tranches and the largest-ever UK corporate deal, with an order book peaking at $35 billion. Of a different scale but no less interesting was the $575 million senior notes it joint-led for Indonesia’s Indika Energy, achieving the lowest-ever coupon for an Indonesian mining company and completing what was a rare example of a bridge to high-yield bond in Asia.
Citi ranked top of global IPOs, but its intellectual capital is deployed most effectively in the more structured segments. Take special purpose acquisition companies (SPACs). Citi perhaps cares about that structure more than any other bank and typically leads the underwriting rankings. This was a market that saw plenty of action in the period under review – and not just in the US. Citi was a joint global coordinator for the UK listing of J2 Acquisition, a SPAC sponsored by entrepreneur Martin Franklin.
Together with other executives, Franklin had previously built up consumer goods company Jarden in the US before selling to Newell Rubbermaid for $14 billion in 2016. For J2, the ninth SPAC he had been involved in, the target market was the UK – a more challenging market for the structure because it is a little less investor-friendly than in the US. At $1.25 billion, the deal was also the biggest SPAC ever in the UK – and the second-largest IPO of any kind in London in 2017.The bank’s project and infrastructure finance franchise is a vital part of its overall offering, and the period under review saw notable examples of its work, particularly in the US. The bank was a coordinating lead arranger to the largest project bond of its type and the largest non-recourse battery-based financing, comprising a $1.475 billion senior secured notes offering and a $492 million senior secured term loan, for AES Southland.