Citigroup plans to expand its research coverage to include around 100 private companies, focusing on influential firms in sectors like AI.

The move mirrors JPMorgan Chase’s recent strategy to cover non-listed companies.

The research will provide event-driven analysis on developments such as product launches, customer acquisitions, and new business lines.

However, Citigroup will not include price targets, buy or sell recommendations, or earnings forecasts.

This reflects the growing influence of private firms like OpenAI, SpaceX, and ByteDance, which have valuations rivaling major S&P 500 companies.

Many have significantly impacted markets or delayed public listings, blurring the line between public and private sectors.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ Private company valuations now rival major public corporations

The private market has reached unprecedented scale, with individual companies commanding valuations that would place them among the largest public companies.

SpaceX’s $350 billion valuation and Bytedance’s $400 billion valuation now exceed most S&P 500 companies 1. The broader private market shows similar magnitude, with 1,276 unicorn companies collectively valued at approximately $4.4 trillion 2.

This represents a significant shift in where economic value is concentrated. When nearly 1,500 startups globally have valuations exceeding $1 billion 3, it becomes increasingly important for investors and analysts to consider private companies when understanding market dynamics.

The scale explains why major banks are now treating private company research as essential rather than optional. These companies have grown too large and influential to be ignored in investment strategies.

2️⃣ Investment banks face competitive pressure to expand research capabilities

Citigroup’s move follows JPMorgan’s recent expansion into private company research, signaling that covering private firms is becoming a competitive necessity.

UBS has already been ahead of this trend, with analysts covering over 1,300 private firms since mid-2022 3. This suggests that banks risk falling behind if they don’t adapt their research models to include private companies.

The competitive dynamic is intensifying because institutional clients increasingly need insights about private companies that directly compete with or influence their public market investments.

JPMorgan’s research division produces around 100,000 research pieces annually 3, demonstrating the massive scale these banks operate at and their capacity to expand coverage without compromising existing services.

Recent Citigroup developments

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