Citigroup Looks to Hire ‘MVP’ Dealmakers Amid Trading-Unit Cuts
Citigroup Looks to Hire ‘MVP’ Dealmakers Amid Trading-Unit Cuts
(Bloomberg) -- When it comes to banking the titans of Silicon Valley, Citigroup Inc. is tired of being left out.
The firm is betting that a raft of senior hires from Goldman Sachs Group Inc. and Deutsche Bank AG, along with a revamped investment-banking division and plans for further expansion in the U.S., will help improve its standings for advising on tech mergers and IPOs. The same goes for the health-care industry.
“We need to punch above where we are today and move into a business that is dynamic and is creating a lot of revenue events,” Kevin Cox, co-head of the firm’s banking, capital markets and advisory group in North America, said in an interview. “We want to start catching these folks earlier and more frequently. The technology space is one where we made a whole host of investments.”
Wall Street saw a slump in both investment banking and trading in the first half of 2019, but Citigroup is responding in very different ways to the two slides. It’s bulking up on dealmakers to take share from rivals; meanwhile, it’s cutting close to 400 people in the trading division.
Cox took the reins of the investment-banking unit with John Chirico in December after Citigroup combined its advisory business with the capital-markets origination division.
That reorganization helps the bank answer key questions about clients’ needs earlier, Chirico said. “When does it stop being an M&A transaction and start being a capital-markets transaction if it’s a spinoff or a direct listing where the security’s just going to trade?” he said. The reorganization “helps us think about that.”
There are early signs of success. Citigroup was the only bank to post an increase in investment-banking fees in the first six months of the year among the five largest firms on Wall Street. The bank said the improved performance came from a gain in market share.
Last year, Citigroup ranked fourth in both advising on mergers and underwriting equity offerings in the U.S., according to data compiled by Bloomberg.
Part of the strategy of targeting companies earlier in their growth cycle stems from other areas of the bank. The firm has been building out its commercial-banking unit, where it handles businesses that are often too small to require the services of the corporate and investment bank. Now Citigroup is building stronger ties between the two units.
“Citi is making a commitment to the smaller corporate players throughout the U.S.,” Cox said. “A lot of them happen to grow up to be very large companies very quickly these days, and we’re creating relationships where they bring us into the situation much earlier than they would have historically.”
In the technology industry, the bank is also looking to take advantage of the rise in so-called direct listings, where closely held companies offer early investors and employees who hold shares a chance to start selling them on a public exchange. The method has become more popular after Spotify Technology SA and Slack Technologies Inc. used it to go public.
Goldman Sachs and Morgan Stanley have been active in the direct-listing business, but it’s often a hard option to pursue for companies that don’t have good enough name recognition. Citigroup has discussed pursuing a direct listing with as many as 10 clients, Chirico said.
“If we think a direct listing is the best outcome for them, we will absolutely do a direct listing,” he said. “I don’t think we’ll have difficulty convincing people that we’d be good at it given the other things that we do.”
For now, the firm’s hiring ambitions are somewhat limited. It’s hoping to selectively add senior coverage bankers, Chirico said.
“What we are going to do is look for most valuable players,” Chirico said. “We will invest in that talent whether it’s here or if we need to go get it.”
--With assistance from Liana Baker.
To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson, Dan Reichl
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