Citigroup is reigniting its private equity lending business with a renewed focus on the $900bn subscription line market, marking a strategic comeback in one of the fastest-growing segments of private capital finance.

The move comes after a period of retreat from the space, during which rivals seized market share following the collapses of First Republic and Signature Bank in 2023. Under the leadership of CEO Jane Fraser, Citi is now aiming to re-establish itself as a core partner to private equity sponsors by re-engaging with capital call credit lines—short-term loans backed by investor commitments.

“These aren’t high-margin loans,” the article notes, “but they open the door to relationships that matter.” By re-entering the market, Citi positions itself for future mandates in underwriting, debt issuance, and M&A transactions.

The bank’s broader goal is to boost its return on tangible common equity to 10–11% by the end of 2026, up from 9.1% last quarter. Part of the push includes the high-profile hire of JPMorgan dealmaker Vis Raghavan to lead its global banking operations.

Subscription line usage has surged in recent years, with nearly 85% of buyout funds using them in 2023, up from 25% a decade ago. As regulatory conditions shift—particularly expectations of lighter Basel III Endgame rules—Citi sees a window to reclaim relevance in private capital markets.

Fraser’s latest move signals a structural reset: Citi no longer wants to sit on the sidelines of private equity—it wants to become essential to it.

Source: Yahoo Finance