Citigroup Inc. is expanding its research on private companies, joining rivals including JPMorgan Chase & Co. in covering firms that aren't publicly traded.
Heath Terry, who has worked at Goldman Sachs Group Inc., Third Point and Balyasny Asset Management, joined Citigroup to lead coverage of the heavily private artificial-intelligence sector and guide other analysts in their research on private firms in their own industries.
Closely held firms, which have proliferated as the number of public companies globally has declined, are dominating increasingly important sectors such as AI and aerospace. That shift has made financial data in global markets less transparent and increased attention on venture capital and private equity firms.
“This is one of — if not the single biggest — structural change in our markets over the last 10, 15 years,” Terry, Citigroup's global head of technology and communications research, said in an interview. “This is just table stakes of being a research analyst in 2025.”
Almost 1,500 startups worldwide have a valuation of $1 billion or more, according to data on private companies compiled by PitchBook.
“The number of VC- and PE-backed companies is up massively compared to what's in the public arena,” said Citigroup research head Lucy Baldwin, who hired Terry. The firm will look to analyze “how different profit pools will be disrupted and which companies will win or lose — whether that's private or public.”
JPMorgan started its coverage of private companies last week with a report on OpenAI. Citigroup, meanwhile, has a list of roughly 100 large and influential private firms it will focus on — predominantly in the tech sector — and will publish research when those firms do something that's particularly relevant to broader markets.
“This is really going to be covering those companies at a granular level — when they have product launches, winning customers, adding a new product line,” Terry said. “We're going to be reacting to it in the same way we would with public companies we cover, because it's going to have an impact on the public companies.”
Covering private companies also demands a different tack than public ones, bringing analysts back to the basics of fundamental research by talking intensely to customers, vendors and partners of the firms they're analyzing — rather than waiting for a quarterly earnings report.
As part of that push, Citigroup will also be looking for access to management teams at private firms. Even without public shareholders, Terry said, there's still an incentive for those companies to talk.
“For private companies that actually need to raise money, having a bigger profile with investors is pretty important, too,” he said.
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