Broad reach
In a difficult year for ECM in Asia-Pacific, one bank found opportunities to raise funds for its clients by thinking differently and moving quickly. For making the most of short windows with its spot-on judgement, Citigroup is IFR’s Asia-Pacific Equity House of the Year.
Citigroup led the way in Asia-Pacific in 2023, securing key roles on the biggest capital raisings of the year and showing its strength across a broad mix of markets and products.
Equity fundraising activity in APAC fell 9.7% in 2023 to US$219.3bn, as offshore China activity continued to be muted.
Still, there were bright spots. Volume more than tripled in Japan to US$32.5bn and was up 61% in India to US$31.2bn, while Indonesia had a big year for IPOs, and Taiwan and South Korea also saw sizeable follow-ons and convertible bond issues.
Leveraging on its corporate and commercial bank footprint, Citigroup’s deep presence across the local markets in Asia-Pacific gave it a unique advantage over competitors and an unrivalled depth to its client relationships. The geographical diversity also helped mitigate regulatory headwinds.
“Our competitors don’t have the geographical diversity that we have. We are the strongest and most diversified in terms of footprint and products,” said Kenneth Chow, head of Asia north/Australia and Asia south equity capital markets products and execution.
In Japan, Citigroup was on all the main transactions. As an international joint lead manager, the US bank participated in Japan Post Holdings' ¥1.2trn (US$8.13bn) follow-on in Japan Post Bank. It also helped bring international demand for e-commerce giant Rakuten Group’s ¥230.4bn primary follow-on in May, after arranging the ¥83.3bn IPO of its online banking unit Rakuten Bank in April.
Citigroup was also a joint bookrunner on KKR-backed chip-making device manufacturer Kokusai Electric's ¥124.6bn IPO in October, Japan's largest in almost five years.
Citigroup’s breadth of business in India, where competition is intense, was particularly impressive. It worked on several high profile IPOs including Tata Technologies, Honasa Consumer, RR Kabel and Concord Biotech.
The Rs30.5bn (US$367m) Tata Tech IPO, in which Citigroup was a joint lead manager, is expected to reopen India tech listings after the stock more than doubled from its issue price. The deal received 7.4m applications, a record for an Indian IPO.
Citigroup also managed India’s first retail real estate investment trust IPO, the Rs32bn Nexus Select Trust float, as well as an Rs88bn qualified institutional placement in Bajaj Finance, SoftBank’s and Carlyle’s blocks in Delhivery (totalling Rs16.5bn) and Ant Group’s Rs20.4bn selldown in Paytm, officially called One 97 Communications.
Market judgement
Quick and accurate market judgement differentiates Citigroup from its competitors.
“You need to be on your toes execution-wise in this kind of market. If you let investors down or go the wrong way, you are not going to get a great reaction,” said Udhay Furtado, head of Asia north/Australia and Asia south ECM origination and solutions.
Mobile game developer Netmarble’s W524bn (US$402m) selldown in Hybe, the South Korean company which manages K-pop group BTS, is a perfect example.
Citigroup as sole bookrunner launched the sale a day after South Korea decided to implement an unexpected short-selling ban that caused a 5% surge in the benchmark Kospi 200 Index.
The deal drew a strong response as many hedge funds saw the trade, which came at an 8% discount, as a chance to cover their short positions. The stock closed at W215,500 the next day, 2.9% above the disposal price of W209,400.
The bank also captured another crucial trend of investment-grade bond issuers turning to the equity-linked market for funds amid high interest rates.
Citigroup, as joint global coordinator, helped South Korean chemicals maker LG Chem raise US$2bn from a bond exchangeable into LG Energy Solution’s shares. The deal is the largest international EB ever in Asia-Pacific and the biggest equity-linked transaction in the country.
Its expertise in equity-linked products was also highlighted by Taiwan Cement’s US$805m equity combo – a US$420m green convertible bond, the first from Taiwan, and a US$385m offer of global depositary shares.
Other trophy transactions included an HK$11.8bn (US$1.5bn) top-up share placement for Chinese sportswear company Anta Sports Products, a Rp10trn (US$643m) Indonesia IPO of nickel producer Trimegah Bangun Persada, a A$1.1bn (US$736m) equity raising for Australian packaging maker Orora and a S$397m (US$298m) block in Singapore Airlines for Temasek Holdings, the state-owned investor’s first block sale in the city state in over a decade.
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