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Citigroup is going through a €59mn lawsuit that was launched by a UK-based funding agency alleging that the Wall Road financial institution offered “deceptive” and “inaccurate” recommendation when working for it on a potential public itemizing.
Alcimos, which needed to boost capital to spend money on the Greek property market, alleged that it misplaced out on tens of hundreds of thousands of euros in charges after Citi bankers misled the agency’s administration about investor urge for food for the IPO in 2018.
Citi has denied the allegations, that are contained in papers filed at London’s Excessive Court docket, and have been reviewed by the Monetary Instances.
The lawsuit centres on Alcimos partaking Citi in late 2017 to organise and conduct early investor conferences a couple of potential sale of shares in a particular objective car and supply suggestions to the corporate.
Alcimos claimed Citi inaccurately instructed its administration that sure buyers weren’t fascinated with supporting an inventory. It alleged that the identical buyers had instantly instructed the corporate that they have been doubtlessly fascinated with collaborating within the IPO.
Citi, which argued that there was not sufficient investor assist to make the proposed IPO viable, denied that it misrepresented the extent of investor curiosity.
The lawsuit is an unwelcome distraction for Citi, which is looking for to maneuver on from a number of high-profile blunders in recent times. Final 12 months, the financial institution was fined $135.6mn within the US for failing to right long-standing issues in danger management and knowledge administration, and was handed a £62mn penalty within the UK for failing to forestall a fat-fingered $1.4bn buying and selling error.
In emails referenced in court docket paperwork, Linos Lekkas, a senior Citi dealmaker who retired final 12 months, apologised to Alcimos’s administration for “any inconsistency in message communication that we might have inadvertently included in our presentation or conveyed throughout any of our calls” earlier than terminating the connection between the businesses.
Alcimos then changed Citi with Barclays in Might 2018, however claimed that “the necessity to clarify Citi’s inaccurate funding suggestions and the substitute of Citi all negatively affected investor sentiment for the proposed IPO”.
It finally deserted the itemizing as a result of deteriorating market situations meant “there was now not ample funding urge for food”. Alcimos, which had hoped to boost as much as €250mn, alleged that it “suffered loss and damages” of €58.6mn because of scrapping the IPO. Citi disputed this.
In its defence submitting, Citi stated there was “inadequate investor urge for food to proceed with the proposed IPO” and that the deal “couldn’t proceed if solely smaller hedge fund buyers have been prepared to take part or if the commitments from bigger buyers have been comparatively small in measurement”.
The financial institution additionally stated whereas it had agreed to co-ordinate early investor conferences for the proposed deal, dubbed “Undertaking Alphabet”, it by no means entered right into a “legally binding settlement” to behave as sole world co-ordinator.
Alcimos was positioned into liquidation in October following a petition from a creditor, in line with Corporations Home filings.
The case has been handed on to the Official Receiver, a part of the UK authorities’s insolvency service, which is now answerable for dealing with the affairs of the corporate and the liquidation, in line with an individual accustomed to the matter. A spokesperson for the Official Receiver stated it didn’t touch upon “ongoing circumstances”.
Individually, Alcimos’s sister firm, which specialises in arranging and sourcing litigation funding, final 12 months co-ordinated a claim for buyers who have been stung by the collapse of Greensill Capital.
Citi declined to remark.
