“VW wants the capital to electrify their business and Porsche is on the path to electrification,” he says.
“We didn’t have to convince VW and Porsche to close the deal. They decided to do it.
“Then we worked towards it. They had a beauty parade and a big part of the equity story will be about electrification and the leadership that Porsche is showing to demonstrate that they will win the race to electrification.
“You win… because you advised”
“This is an example of the type of transaction my team and I will be actively involved in. There’s a big energy or ESG component to most of the IPOs we do these days.”
Tuffley winces when asked if investment bankers working on sustainability need to become advisors rather than bankers, given the need to convince some companies of the merits of decarbonization.
“You don’t find a banker who says: Oh, we are consultants,” he says.
“They will say: We are deal doers, we are bankers – consulting is for the other guys.
“But the reality is that any good M&A banker has to constantly bring ideas to their clients in order to win the deal. You can’t wait for the phone to ring.
“You have to be out there and talk to CEOs. You take their ideas and give them advice on what to do.
“They bring them ideas for a takeover or a split or whatever. You win the transaction because you advised.”
When Tuffley spoke to Chanticleer in April 2019, he had just been hired by Citi to advise CEOs, chief financial officers and boards of directors on their companies’ transition to net-zero emissions.
At the time, Tuffley was adamant that agriculture and food would be one of the growth areas for banking advice and transactions.
However, the majority of companies in these two sectors of the global economy have not been part of the wave of corporate commitments to net-zero carbon emissions by 2050.
The Farming Challenge
Tuffley shares some compelling statistics that highlight the challenges facing the agri-food sector.
He says research by Citi analysts shows that food production is responsible for a third of global greenhouse gas (GHG) emissions, yet about a third of the food produced for human consumption is either lost or wasted — an annual loss of $1 trillion U.S. dollar.
He says eating habits need to change because every gram of protein from beef requires 20 times more land and emits 20 times more greenhouse gas emissions than beans.
The demand for animal-based foods is expected to increase by 80 percent between 2006 and 2050, and beef consumption by 95 percent.
Citi analysts have calculated that agriculture and food production use 70 percent of the world’s freshwater and are responsible for 80 percent of deforestation. Also, the rate of land degradation has accelerated, reaching 30 to 35 times the historical rate.
Tuffley says the agriculture and food sectors have been “laggards” when it comes to reducing carbon emissions, but he doesn’t blame sector leaders.
“I think all of us haven’t really listened to the science and taken it to the same level that we’ve been so focused on in energy,” he says.
“Food and agriculture are even more complex than energy because we are emotionally attached to food.
“It is difficult to change human behavior. And you really don’t know what damage is done when preparing food because it’s very difficult to measure greenhouse gas emissions.”
Tuffley says his department’s growth is a tribute to his boss Manolo Falco, Citi’s global co-head of banking, capital markets and advisory, and the fact that most global companies are progressive when it comes to reducing carbon emissions.
“Total in France, for example, is very progressive – we don’t have to convince them of the energy transition, they are already doing it. We have to help them implement it,” he says.
Unique claim to fame
“In other parts of the world, we have to convince companies – and I won’t name them – that this actually matters because in 30 years their business model will no longer exist.”
Tuffley, who oversaw the merger of Goldman Sachs and JBWere’s Australian businesses in 2003, has a unique claim to fame in investment banking circles.
After the merger with JBWere, he received a license from Goldman Sachs CEO Hank Paulson in New York to look for young bankers.
This was the catalyst for hiring seven bankers who later became heads of investment banking.
He hired Tony Osmond, who later became head of corporate and investment banking at Citi, Christian Johnston, who later became head of investment banking at Goldman Sachs, Paul Uren, who is now JP Morgan’s co-head of global investment banking in Asia Pacific , Nick Sims, co-head of investment banking at Goldman Sachs for Australia and New Zealand, Joe Fayyad, CEO and country executive Australia at Bank of America, and James McMurdo, former head of Deutsche Bank’s corporate and investment bank for Asia Pacific.
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