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Citigroup is facing a €59mn lawsuit that was launched by a UK-based investment firm alleging that the Wall Street bank provided “misleading” and “inaccurate” advice when working for it on a prospective public listing.
Alcimos, which wanted to raise capital to invest in the Greek property market, alleged that it lost out on tens of millions of euros in fees after Citi bankers misled the firm’s management about investor appetite for the IPO in 2018.
Citi has denied the allegations, which are contained in papers filed at London’s High Court, and have been reviewed by the Financial Times.
The lawsuit centres on Alcimos engaging Citi in late 2017 to organise and conduct early investor meetings about a potential sale of shares in a special purpose vehicle and provide feedback to the company.
Alcimos claimed Citi inaccurately told its management that certain investors were not interested in supporting a listing. It alleged that the same investors had directly told the company that they were potentially interested in participating in the IPO.
Citi, which argued that there was not enough investor support to make the proposed IPO viable, denied that it misrepresented the level of investor interest.
The lawsuit is an unwelcome distraction for Citi, which is seeking to move on from several high-profile blunders in recent years. Last year, the bank was fined $135.6mn in the US for failing to correct long-standing problems in risk control and data management, and was handed a £62mn penalty in the UK for failing to prevent a fat-fingered $1.4bn trading error.
In emails referenced in court documents, Linos Lekkas, a senior Citi dealmaker who retired last year, apologised to Alcimos’s management for “any inconsistency in message communication that we may have inadvertently included in our presentation or conveyed during any of our calls” before terminating the relationship between the companies.
Alcimos then replaced Citi with Barclays in May 2018, but claimed that “the need to explain Citi’s inaccurate investment feedback and the replacement of Citi all negatively affected investor sentiment for the proposed IPO”.
It ultimately abandoned the listing because deteriorating market conditions meant “there was no longer sufficient investment appetite”. Alcimos, which had hoped to raise up to €250mn, alleged that it “suffered loss and damages” of €58.6mn as a result of scrapping the IPO. Citi disputed this.
In its defence filing, Citi said there was “insufficient investor appetite to proceed with the proposed IPO” and that the deal “could not proceed if only smaller hedge fund investors were willing to participate or if the commitments from larger investors were relatively small in size”.
The bank also said while it had agreed to co-ordinate early investor meetings for the proposed deal, dubbed “Project Alphabet”, it never entered into a “legally binding agreement” to act as sole global co-ordinator.
Alcimos was placed into liquidation in October following a petition from a creditor, according to Companies House filings.
The case has been passed on to the Official Receiver, part of the UK government’s insolvency service, which is now responsible for handling the affairs of the company and the liquidation, according to a person familiar with the matter. A spokesperson for the Official Receiver said it did not comment on “ongoing cases”.
Separately, Alcimos’s sister company, which specialises in arranging and sourcing litigation funding, last year co-ordinated a claim for investors who were stung by the collapse of Greensill Capital.
Citi declined to comment.
