First growth:
Citigroup was a leader in equity-linked, provided better outcomes on IPOs and drove the expansion of SPACs in Europe. As conditions became more difficult, Citigroup became more prominent and is IFR's EMEA Equity House of the Year.
In Bordeaux’s vineyards it is always a difficult year. It is precisely from battles with the elements that the vines produce wine of the century or supermarket plonk.
It is a similar story with ECM. 2021 saw a record harvest, but not without struggles. A year that began with the sun shining brightly saw conditions become much trickier as investors started becoming concerned about rising inflation and rates. Some IPOs failed while others delivered massive losses for investors. Amid it all, Citigroup differentiated itself from rivals with the outcomes of its transactions.
By the post-summer period there had already been a few waves of investors rotating from growth to value stocks, causing considerable difficulty for IPOs that largely involve the former.
Online car retailer Auto1, for instance, had completed its €1.8bn IPO in February – with Citigroup as a global coordinator – and was trading 17% above top-of-the-range pricing a month later, yet it was below issue by the end of August. E-commerce delivery firm InPost had employed Citigroup as a global coordinator on its €3.2bn IPO in January. That deal also priced at the top of the range, was 17% up after a month only to fall below issue a matter of weeks later.
Despite the upheaval, Citigroup was extremely active with 14 IPOs priced in the post-summer period when it was on the top line, including three special purpose acquisition companies.
Only one of those priced below the range, the restructured Eurowag float, and one at the bottom of the range for French computing business OVHcloud. While Eurowag shares have struggled, OVH was up 6.5% on debut in October and 44% by late January.
Stripping out the SPACs, Citigroup’s IPOs in the last four months of the year returned 8.5% on average on debut and just under 25% by late January. That included a spectacular 44% gain on debut from the £603m IPO of life sciences company Oxford Nanopore and the Saudi IPO of Acwa Power that priced at the top of the range and still gained 30% on debut.
“This wasn't actually an easy year to be an ECM practitioner. You couldn't take your experience on the previous deal and just copy and paste it for the next deal. Every deal was slightly different,” said Suneel Hargunani, co-head of EMEA ECM alongside Valery Barrier.
“Each and every one of those transactions had a lot of thinking, advice and structuring,” said Barrier.
Citigroup was global coordinator on IFR’s EMEA IPO of the Year (Allfunds) and our Asia-Pacific Secondary Equity Issue of the Year (Prudential’s Hong Kong follow-on).
It was sole global coordinator on America Movil’s €2.1bn exchangeable bond into KPN, our choice for EMEA Structured Equity Issue of the Year.
The US bank dominated jumbo equity-linked issuance as it was also sole bookrunner on a US$1.2bn exchangeable bond by Adnoc into Adnoc Distribution in May, which came alongside a US$445m Adnoc Distribution accelerated bookbuild. Combined equity and equity-linked deals were also used by Citigroup for Engie/GTT, Cellink and Helios Towers.
The bank ended the year in second place for EMEA equity-linked, up a remarkable nine places – and that’s without the AMX/KPN trade that went into the Americas numbers.
German incubator Rocket Internet was one of several European clients to venture to the US. It had delisted from Frankfurt in 2020 after a fairly torrid time as a public company, only to raise US$250m with a NYSE-listed SPAC in March.
The bank was sole bookrunner on the first SPAC to list in London following changes to bring the UK rules into line with other jurisdictions.
Citigroup led the largest European SPAC of the year – €500m for Pegasus Europe in April – with the same sponsors returning in December for €210m with another SPAC. Citigroup was the only bank on both.
Large syndicates blur the contribution of each bank so repeat mandates are significant. TUI provided an exceptional example in 2021 with, in chronological order, a €545m rights issue, €400m CB, €200m CB tap and €1.1bn rights issue. Only Citigroup was on the top line of all four.
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