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Citigroup is facing a €59 million lawsuit launched by a UK-based investment firm, alleging the Wall Street bank provided “misleading” and “inaccurate” advice when working for it on a public listing of possible.
Alcimos, which wanted to raise capital to invest in the Greek property market, claimed it lost tens of millions of euros in fees after Citi bankers misled the firm’s management about investor appetite for the 2018 IPO.
Citi has denied the allegations, which are contained in documents filed at the High Court in London and reviewed by the Financial Times.
The lawsuit centers on Alcimo’s engagement with Citi in late 2017 to arrange and conduct early investor meetings regarding a potential sale of shares in a special purpose vehicle and to provide feedback to the company.
Alcimos alleged that Citi incorrectly told its management that some investors were not interested in backing a listing. He claimed that the same investors had directly told the company that they were potentially interested in participating in the IPO.
Citi, which argued it did not have enough investor support to make the proposed IPO viable, denied it misrepresented the level of investor interest.
The lawsuit is an unwelcome distraction for Citi, which is seeking to recover from several high-profile missteps in recent years. Last year, the bank was fined $135.6m in the US for failing to correct long-standing problems in risk controls and data management, and was fined £62m in the UK for failing to prevent a trade error of $1.4 billion.
In emails referenced in court documents, Linos Lekkas, a senior Citi trader who retired last year, apologized to Alcimo’s management for “any inconsistencies in messaging that we may have included without intentionally in our presentation or forwarded during any of our phone calls” before we ended the relationship between the companies.
Alcimos subsequently replaced Citi with Barclays in May 2018, but claimed that “the need to explain Citi’s inaccurate investment reactions and the replacement of Citi all negatively impacted investor sentiment about the proposed IPO.” .
In the end it abandoned the listing because deteriorating market conditions meant that “there was no longer enough appetite for investment”. Alcimos, which had hoped to raise up to 250 million euros, claimed it “suffered losses and damages” of 58.6 million euros as a result of the IPO being scrapped. Citi objected to this.
In its defense 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 participated or if the commitments from larger investors were relatively small in size.
The bank also said that while it had 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 was placed into liquidation in October following a petition from a creditor, according to Companies House filings.
The case has been passed to the Official Receiver, part of the UK government’s insolvency service, which is now responsible for handling the company’s affairs and liquidation, according to a person familiar with the matter. A spokesman for the Official Receiver said it did not comment on “ongoing cases”.
Separately, Alcimo’s sister company, which specializes in arranging and providing litigation funding, last year coordinated a claim for investors hit by the collapse of Greensill Capital.
Citi declined to comment.
