Citigroup hires for team to capture Australian unicorns

[NEW YORK] Citigroup, which typically advises the world's biggest companies, is hunting for smaller clients in Australia, targeting businesses with revenue of as little as A$75 million (S$72.9 million) to get a competitive advantage in major deals down the track.

The US lender, which set up a commercial-banking business in Australia in 2019, is planning to expand its team to 35 by the end of 2024 from 22 currently, according to Alex Syhanath, head of the local unit.

The aim is for commercial banking, which currently comprises just 2 per cent of Citigroup's overall revenue in the country, to eventually contribute about 10 per cent, he said.

It's part of a strategy Citigroup has been pursuing across Asia, where the business of banking smaller clients across 11 markets contributes around a third of the bank's global commercial banking revenue.

Chief executive officer Jane Fraser has spoken of the importance of servicing mid-size customers globally, noting that Uber and Airbnb for example started off as clients of the bank's commercial bank in the US.

The aim is for the commercial bank to act as an incubator for the investment bank and give Citigroup "the ability to capture and identify 'unicorns' like Afterpay, that we can then help to list and grow", said Syhanath, referring to the buy-now-pay-later business that was snapped up by Jack Dorsey for his Block empire in the biggest-ever M&A deal for an Australian company earlier this year.

In Australia, Citigroup has significantly lowered the revenue threshold for companies it is advising from A$200 million in 2019. The commercial bank now has about 220 clients.

"This space in terms of companies' growth is much stronger than the bigger institutional space," Syhanath said in an interview. "We have targeted companies that need help offshore because the domestic banks have limited services outside of Australia, and the idea is that we can eventually help with strategic acquisitions when they are ready."

TOUGH COMPETITION

He notes it is an increasingly competitive market, with JPMorgan Chase & Co also entering the space long dominated by the so-called Big Four local banks and HSBC Holdings.

But for Citigroup, the strategy is slowly starting to pay off after a tough first year hampered by the pandemic, he said. Last month's acquisition of a smaller rival by automotive parts and water products manufacturer GUD Holdings, a client of the commercial bank, is a prime example, he said.

The investment banking team advised on the A$744.6 million purchase of AutoPacific Group and the deal was backed by a A$405 million equity raise and debt facilities arranged by the bank, delivering the lender 3 separate fee-generating opportunities.

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