M&A strong though Chinese buyers lacking: Citigroup’s Kalvaria

CitiGroup Building. Photo: Mint

Geopolitical uncertainties are not deterring Citigroup Inc clients from strategic deals and some unicorns’ offer “great potential”, but outbound Chinese buyers are lacking, Leon Kalvaria, chairman of the lender’s institutional clients group said.

Kalvaria also told the Reuters Global Markets Forum on Thursday that Citi’s overall market share across advisory, syndicate lending, equity and debt origination rose in 2019, but attracting and retaining talent is challenging in the business.

Below are excerpts from the chat, held on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland:

Is geopolitical uncertainty keeping some corporate clients, who would otherwise be looking for deals or other financing, on the sidelines?

I don’t think geopolitical uncertainties are affecting clients who are looking to do strategic transactions. However, that said, obviously outbound mergers and acquisitions (M&A) from China has gone down considerably, but other cross border M&A remains reasonably strong.

Many of Citigroup‘s competitors are going downmarket to look for growth since there is more competition for the biggest deals but fewer of them. Why hasn’t Citi followed suit?

We are not going down market because we do not believe that’s the right phraseology. What we are doing is spending significant time on smaller emerging growth companies, which we believe, over time, will be winners within their sub-sectors.

Those companies are candidates for initial public offerings, merger and acquisition (M&A) opportunities and other potential services that we can bring to bear as they grow globally.

How has the era of “unicorns” changed the way Citigroup sources new clients?

The era of unicorns relates to the earlier question about covering smaller companies. The unicorn valuations help highlight companies with great potential for us to cover and are very helpful in the areas we should invest in from the people’s standpoint.

In 2018, Citi’s overall market share across advisory, syndicate lending and equity and debt origination rose to 5.1%, from 4.9%. How is the effort to capture more market share progressing and what are the biggest hurdles?

We continue to increase market share in 2019 slowly and carefully. The hurdles remain in retaining and attracting the best talent. This is a people business and we have to ensure that we have the best.

How will the corporate banking landscape change, given recent consolidation in the capital markets industry? Will fewer players in equity or debt impact the other corporate banking business lines?

Corporate banking business will remain a broad global business. Obviously the big 3 American corporate banks continue to enjoy a very strong position in the marketplace and remain very strong. But they (face) competition from leading banks in Asia and Europe.

In terms of fixed income and equities, some players have retreated to some extent and that has given other players the opportunity to pick up market share.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.