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John Paulson and George Soros among the new shareholders of Greek banks

02 December 2015 / 20:12:41  GRReporter
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Major foreign institutional investors and Greek investors as well as some hedge funds are included in the list of participants in the recapitalisation of the four Greek systemic banks. Previous shareholders as well as numerous new formations have taken major positions in specific equity stimulated by the attractive assessments and the expectations for banks to improve their balance sheets in the coming years. The total amount received through the process of book building is in the order of 3.6 billion euro and will reach 4 billion euro if the upcoming sale of shares of the National Bank of Greece to Greek investors amounting to 308 million euro is covered. The conversion of bonds into shares has brought additional capital amounting to 3.5 billion euro. Most of these bondholders are foreign investment capitals. Moreover, many of them have been invested since the middle of summer at very attractive valuations, with the prospect of replacing them with shares, as noted by foreign financial circles. The total capital requirements of up to 14.4 billion euro required to cover the worst-case scenario are complemented by the plans for the expected revenues from capital actions approved by the Single Supervisory Mechanism (SSM) and, of course, by the 5.7 billion euro from the Financial Stability Fund. The sums deposited in the book building process have exceeded the targets, the entries in Eurobank and Alpha Bank holding the lead, which however do not have to resort to assistance from the Financial Stability Fund.

It seems that the major investors in Greek banks involve investment companies such as J. Paulson & Co, Brookfield Capital Partners Limited, Fairfax Financial, Highfields Capital Management, WL Ross & Co, Oceanwood Capital Management, Soros Fund Management, King Street Capital Management, Lansdowne Partners, Och Ziff Capital, Moore Capital and dozens of others. Moreover, many of them are participating in more than one bank.

The capital increase involves international organizations such as the European Bank for Reconstruction and Development (EBRD) and the IFC division of the World Bank. Banking sources also indicate the involvement of large foreign sovereign funds that were previously present in the share capital of banks, such as the State Fund of Norway, Norges Bank Investment Management, Qatar Investment Authority, as well as the wealth fund of Abu Dhabi. Popular names such as Wellington Management, a major shareholder in Piraeus Bank for years, and Fidelity and Baupost Group are indicated as investors participating in the capital increase in more than one bank.

In addition, it should be emphasized that Greek-owned capital is seriously involved in the process. For example, its involvement in the share capital of Piraeus Bank after the increase will reach 40%, another 34% will go into the hands of foreign institutional investors and the remaining 26% will be held by the Financial Stability Fund. It should also be noted that the percentage of the Financial Stability Fund in Eurobank is limited to around 2%, in Alpha Bank to 11%, whereas in the National Bank of Greece it is 35%.

Hedge funds

Naturally, among the investors there are ‘pure’ hedge funds, including Marshall Wace LLP, Kairos Capital LLC and GLG and Man Group as well as BlackRock, Lancaster Investment Management, FinTech, GDP Capital Partners, Global X, Vanguard Group, Lyxor International, Eaton Vance and Dimensional Fund Advisors. Some of them are passively managed funds that aim to cover the cost of adjustment ratios of Greek banks in indices such as MSCI and others that are followed by them. Part of the capital that seems to be imported from foreign companies is believed to have come from managed accounts of individual persons, i.e. capital of individual persons that is involved in the capital increase in this discreet way.
Brookfield Capital Partners and Highfields Capital Management that participated as anchor investors in the capital increase of Eurobank stand out among the major foreign institutional investors that have taken serious positions in Greek banks for the first time. I.e. they have joined existing funds such as Fairfax Financial Holdings, Mackenzie Financial Corporation and The Capital Group Companies that seem to have also participated in this capital increase. The funds Brookfield and Highfields from Toronto and Boston are companies with a joint managed capital amounting to 200 billion euro.

Tags: RecapitalisationGreek banksInvestorsFundsCapital requirements
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