Morning Coffee: Vis Raghavan might have created the best new jobs in banking. The biggest grudge match in M&A advisory

It appears that Vis Raghavan of Citigroup has made his first big strategic move as head of Citi’s investment bank. It’s a deal with Apollo Management, and a couple of tagalongs like Mubadala, under which Citi’s investment bank will source at least $25bn of loans in the “private credit” space (loans to medium sized corporates and to private equity funds), and then sell them on to the syndicate collecting a fee.

Get Morning Coffee ☕ in your inbox. Sign up here.

Raghavan also might just have created some of the very sweetest jobs on the Street. Private credit origination is a lucrative place to be employed, but it’s hard work. One of the hardest things about it is maintaining your relationships with the financial sponsors.

But now some Citi bankers are going to have a guaranteed, first call, direct line to one of the biggest and most aggressive funds that there are. Like the euro short term interest rate trading desk that Gary Stevenson worked on, the people who are in the right place with respect to this relationship cannot fail to be some of the biggest revenue producers among their peers.

So what kind of people are going to get these plum jobs on the new team? Firstly, they’re going to need to be very, very sharp. It’s easy to see the appeal of this deal to Vis Raghavan – it ought to let Citi leverage its franchise without tying up regulatory capital, boosting business volumes and return on equity all at once.

The trouble is that if you think you’ve found an easy way to make money out of Apollo Management, it’s usually a good idea to think again. A deal like this will have lots of conditions and caveats – if nothing else, Apollo needs some way to be sure that Citi will take just as much care over its loan origination when it knows that the credit risk is going to be sold on. And historically, Apollo’s style has been to get very aggressive indeed in using those conditions and caveats for its own advantage. 

Vis Raghavan, therefore, will be looking for bankers who are just as aggressive and tricksy. The kind of people who can jump into a snake pit, then immediately bounce back out with a smile on their face and a new snakeskin wallet.

He will also be looking for loyalty. It’s a well-known phenomenon that when a banker has a single massive client, they tend to blur the line between “putting the client’s interests first” and “forgetting which side of the trade they’re on”. There’s a strong danger that Citi’s bankers will either get hired away quickly by Apollo as it grows its private credit franchise, or possibly worse, stay, but act like they’re working for Marc Rowan.

So expect Vis to fill the key positions either with long-tenured Citibankers that he rates, or possibly with new hires from JP Morgan who have personal loyalty to him. Whoever gets into this new team can look forward to a fun and rewarding few years.

Elsewhere, has the battle for Commerzbank just got a little bit personal? The German bank’s supervisory board has decided to hire UBS to advise it on any potential bid from Unicredit. And of course, UBS is the firm where the Unicredit CEO Andrea Orcel made his name, from which he departed on less than perfectly friendly terms, and where there may be some employees, particularly in the FIG banking teams, who have memories of a somewhat “angry” management style.

So there may be a little bit of personal needle between the two sides. It’s not out of the question that this might end up having an effect on the eventual outcome. Anybody who believes that a banker wouldn’t work harder just for the opportunity to put one over on an old rival can’t know many bankers.

There’s an initial meeting between the two top teams scheduled for today. It would be very interesting indeed to be a fly on the wall (or a member of the Goldman Sachs team who are advising the management board), just to get a feel for what the atmosphere is like.

Meanwhile…

A measure of where the image of private equity is; the Financial Reporting Council has told all audit firms that they should think very carefully and consult the regulator before considering allowing PE firms to make investments in their business. (FT)

The London office of PJT Partners paid its employees an average of £602,000 last year (although this is likely to be the central average of a very skewed distribution). It’s been growing very rapidly; although fees were up 63% on last year, profits were down as the up front cost of hiring went through. (Financial News)

Although the overall environment at SocGen is one of cost cutting, they are still expanding in some strategic areas. The French bank is opening up a California office to cover TMT clients, with John Jansen joining from UBS and Jonathan Weinberger relocating from SG’s New York office. (Bloomberg)

A definite sign of the times – UK Chancellor Rachel Reeves is going to tell the regulators that they need to show how much they are supporting the growth of the financial services industry. Historically, this means that we’ve got five to ten excellent years to look forward to before the next crash. (FT)

Interesting long read on the first women to work in front-office roles on Wall Street, back in the Mad Men era. (WSJ)

Overwork and fatigue are clearly a much more important issue when the people collapsing from sleep deprivation are airline pilots rather than junior bankers. But strangely, a lot of the same problems crop up in trying to address the problem – everyone wants to work, dividing up the jobs isn’t as easy as it looks, and the technology that’s meant to make sure everyone respects the limits often doesn’t work. (WIRED)

Hedge Funds Rock! Is the name of an Australian charity which runs an annual gala dinner to celebrate the Aussie hedge fund industry.  And they’ve had a lot to celebrate this year, with better returns than global peers and strong inflows. (Bloomberg)

Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, WhatsApp or voicemail). Telegram: @SarahButcher. Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. Signal also available.

Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)