Citigroup faces €59mn lawsuit over abandoned property IPO

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Citigroup is facing a €59mn lawsuit launched by a UK-based investment firm alleging the Wall Street bank provided “misleading” and “false” advice while acting for it on a potential public listing.

Alcimos, which sought to raise capital to invest in the Greek property market, alleged that it lost several million euros in fees after Citibankers misled the firm’s management about investor appetite for an IPO in 2018.

The City has denied the allegations, which are contained in papers filed at the High Court in London and reviewed by the Financial Times.

Organized and conducted initial investor meetings regarding the potential sale of shares in a special purpose vehicle focused on Alcimos engaging Citi in late 2017 and providing feedback to the company.

Alcimos claims Citi wrongly told its management that some investors were not interested in backing a listing. It is alleged that the same investors have directly told the company that they are interested in participating in the IPO.

Citi, which argued that there was insufficient investor support to execute the proposed IPO, denied that it had misrepresented the level of investor interest.

The case is an unwelcome distraction for the City, which is looking to move on from several high-profile mistakes in recent years. The bank was fined last year $135.6 million Fines of £62mn were handed down in the US for failing to correct chronic problems in risk controls and data management, and in the UK for failing to prevent a fat-fingered $1.4bn trading error.

In emails cited in court documents, Linos Lekkas, a senior City dealmaker who retired last year, apologized to Alcimos’ management “for any inconsistencies in message communication that we may have inadvertently included in our presentation or communicated during any of our calls”. Relationship between companies.

Alcimos then joined Barclays instead of Citi in May 2018, but claimed that “Citi’s misinvestment response needs to be explained and that Citi’s replacement has negatively impacted investor sentiment for the proposed IPO”.

It eventually abandoned the listing because deteriorating market conditions meant there was “no longer sufficient investment appetite”. Alcimos, which had hoped to raise up to €250mn, complained that it had “suffered losses and damages” of €58.6mn as a result of the cancellation of the IPO. The City disputed 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 small hedge fund investors were willing to participate or if commitments from large investors were relatively small in size.”

The bank also said that while it had agreed to coordinate the initial investor meeting for the proposed deal, known as “Project Alphabet,” it had not entered into a “legally binding agreement” to act as the sole global coordinator.

Alcimos was placed into liquidation in October following a creditor’s petition, according to a Companies House filing.

The case 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 person familiar with the matter. A spokesman for the Official Receiver said it did not comment on “ongoing litigation”.

Separately, Alcimos’ sister company, which specializes in litigation funding arrangements and sourcing, last year An integrated claim For investors who were shocked by the collapse of Greenseal Capital.

The city declined to comment.