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Citigroup faces €59m lawsuit from UK-based investment firm alleging Wall Street bank provided ‘misleading’ and ‘inaccurate’ advice while working for it on a possible public listing.
Alcimos, which wanted to raise capital to invest in the Greek real estate market, claimed it lost tens of millions of euros in fees after Citi bankers misled the company’s management about investors’ appetite for the IPO in 2018.
Citi denied the allegations, contained in documents filed at the High Court in London and reviewed by the Financial Times.
The lawsuit focuses on the fact that Alcimos hired Citi in late 2017 to organize and conduct preliminary meetings with investors about a potential sale of stock in a special purpose vehicle and provide feedback to the company.
Alcimos claimed that Citi falsely represented to its management that some investors were not interested in supporting a listing. It alleged that the same investors directly informed the company that they were potentially interested in participating in the IPO.
Citi, which argued 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 turn the page after several high-profile mistakes in recent years. Last year the bank was fined $135.6 million in the United States for failing to correct long-standing problems with risk controls and data management, and was fined £62 million in the United Kingdom for failing to failed to prevent a $1.4 billion trading error.
In emails mentioned in court documents, Linos Lekkas, a senior Citi trader who retired last year, apologized to Alcimos management for “any inconsistencies in communicating the messages we may have may have been inadvertently included in our presentation or transmitted during one of our calls” before terminating the agreement. relationship between companies.
Alcimos subsequently replaced Citi with Barclays in May 2018, but claimed that “the need to explain Citi’s inaccurate investment returns and the replacement of Citi all negatively affected investor sentiment towards the IPO on the proposed stock exchange”.
It eventually abandoned the listing because deteriorating market conditions meant “there was no longer sufficient investment appetite”. Alcimos, which hoped to raise up to 250 million euros, claimed to have “suffered losses and damages” of 58.6 million euros as a result of abandoning the IPO. Citi disputed this.
In its defense filing, Citi said there was “insufficient investor appetite to proceed with the proposed IPO” and that the transaction “could not proceed if only small hedge fund investors were willing to participate or if larger investor commitments were relatively small. “.
The bank also said that while it agreed to coordinate early investor meetings for the proposed deal, dubbed “Project Alphabet,” it never entered into a “legally binding agreement” to act as sole global coordinator.
Alcimos went into liquidation in October following a request from a creditor, according to Companies House filings.
The matter has been referred to the Official Receiver, part of the UK government’s Insolvency Service, which is now responsible for managing the company’s affairs and liquidation, according to a source familiar with the matter. A spokesperson for the Official Receiver said it did not comment on “pending matters”.
Furthermore, Alcimos’ sister company, which specializes in organizing and finding funding for litigation, launched last year coordinated a claim for investors stung by the collapse of Greensill Capital.
Citi declined to comment.
