Private Equity Firms Scour Greece for Investments

Private equity firms, both local and international are looking towards Greece for potential purchases as low valuations and the reach for yield continues to attract investors. A Reuters  report states that yield hungry private equity investors are look to Greece for higher returns. In January, we reported that hedge funds attracted by cheap valuations were analyzing investment opportunities in Greece, Spain, Portugal and Italy.

Theodore Kiadikis, a partner of Global Finance, a Greek private equity firm, believes that now is the right time to invest in Greece. He said, “We think now is the time to look at this actively. He added that they should have started raising a new fund two years ago, but Greece’s position made it hard to find investors. Even prior to the debt crisis, the private equity market in Greece was small compared to many European countries and The United States. However, the industry further shrunk as the crisis sent the Greek economy into a tailwind.

In addition, Kiadikis believes, “There are liquidity needs that a private equity fund could cover, there are now willing sellers, there are banks that have to lighten their balance sheets. Crucially, there is light in the end of the tunnel for the economy.”

Last January, Global Finance sold a 56.5 percent stake in Eurodrip SA (ATHENS:EDRIP), an irrigation equipment maker for 68 million euros to Paine & Partners LLC, a private equity group based in the United States.

Paine & Partners was attracted to the business of Eurodrip SA (ATHENS:EDRIP) a global company that generates 93 percent of its revenue outside Greece. The firm made a return of 1.5X on the investment. Banks have approved the firm’s assumption of the company’s debt, which prevented the need for a new financing.

Marfin Investment Group (ATHENS:MIG), a private equity and venture capital firm specializing in start-ups is currently negotiating with investors regarding the possibility of issuing new equity primarily through bolt-on acquisitions by its portfolio companies.

George Koulouris, CEO of Marfin Investment Group (ATHENS:MIG) is confident that investors will generate gains this time. According to him, “We believe people could easily double their money between two to three years’ time, an over 30 percent internal rate of return. Such is the disconnect between where asset values are and where they should be. We see in our own portfolio that the worst quarters are behind us.”

Foreign private equity firms are targeting some of Greece’s largest public companies, BC Partners and TPG Capital are competing to acquire a 33 percent stake in OPAP (ATHENS:OPAr), a gambling monopoly going private.

Seth Klarman’s Baupost Group owns 5.2 percent stake in OPAP. The hedge fund manager is reportedly interested in increasing its stake in the company to 10%.

Dan Loeb’s Third Point which made over $500 on Greek debt also expressed interest to invest in OPAP. The Greek gambling company is the largest gaming operator in Europe by revenue. The government of Greece owns approximately a third of the company. The company has the sole concession to operate all lottery and sporting events in Greece until 2020 and controls 71 percent of the Greek gaming market.

Fortress Investment Group LLC (NYSE:FIG) and Oaktree Capital Group LLC (NYSE:OAK) are scouring Greece for investments.

Kostas Vassiliou, head of global corporate clients and debt capital markets at Greece’s Eurobank said, “I believe the greatest opportunities for alternative fund managers in Greece are primarily in direct lending at the top end of the capital structure to quality high-yield large corporate borrowers, and providing growth capital to healthy fast-growing mid-caps.”

Who was among the first to publicly that there were many bargains in Greece? ValueWalk of course! In July 2012, the site stated Greek stocks were possibly the best bargains in the past 60 years. At the time, readers thought we were crazy. Since July, the Greek stock market is up approximately 60%.

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