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A second major deal of Fairfax in Greece

19 October 2013 / 13:10:52  GRReporter
2233 reads

The most important news of recent days includes yesterday's sale of 4,970,000 shares of Mitilineos to the Fairfax Fund. At a time when the government’s development plans are moving slowly, the real economy is demonstrating its strong reflexes at first line companies’ level by attracting investors of international stature.

Later, at 12:03 p.m., it became clear that the shares were sold on 18 October at a price of 5.13 euro per share with a total value of 25,508,325 euro. The buyer's identity was revealed afterwards. It is said that this is the largest investor in the world, and it is possible that this cooperation will expand in the future. Fairfax Financial Holdings has already stepped on the Greek market with the acquisition of a majority stake in Eurobank Properties, and according to sources it was aiming at the bank as a whole.

Interest in the banking sector

Fairfax is interested in the Greek banking market, mainly in the National Bank-Eurobank, but the Fund 

and its director Prem Watsa reckoned that conditions were unattractive in the process of recapitalization. Apparently, the Fund has retained its positive attitude to Eurobank. Fairfax is closely monitoring developments in the banking sector, and Prem Watsa visited Athens a few months ago and made a lot of contacts with Greek bankers.

Capital to the amount of 32 billion euro

The capital giant’s activities are carried out from Canada and its capital amounts to 32 billion euro. Its tactics are aimed at companies that are promising, and that is why it enters their share capital as a strategic investor. Founder and executive director Prem Watsa, who is of Indian origin, has been looking for investment opportunities in Athens since 2011. Besides its recent activities on the Greek market, the fund bought Blackberry on international markets.

In 2012, it acquired shares in many companies (including Jumbo). Stock sources admitted that the advent of Fairfax in Mitilioneos can positively affect the stock climate at a psychological level.

Prem Watsa left India and settled in Canada, with just 8 dollars in his pocket. There, he began selling fans from door to door. The proceeds funded his education in business administration at the University of Western Ontario. His personal fortune is estimated at 2 billion euro. His favourite phrase is the following: "Trees do not reach the sky and markets do not fall down to the floor."

The Fund invests 144 million euro in Eurobank Properties

The contract of Eurobank Properties with Fairfax Financial Holdings, which was announced in June, is currently being performed. According to its terms, Eurobank Properties will increase its share capital to the amount of approximately 193 million euro with a right of preference in favour of former shareholders and a cost of 4.80 euro per new share. Fairfax is committed to buying Eurobank’s rights for a total of 20 million euro and investing 144 million euro in total.

After the capital increase, Fairfax will own 41% of Eurobank Properties, and Eurobank will retain approximately 33.5%. According to the contract, Eurobank and Fairfax will cooperate and the bank will retain the management until 30 June 2020, while Fairfax will have representatives on the Board, as well as veto power. This regime will apply as long as the share of Eurobank in Eurobank Properties remains higher than 20%. If this changes, rights of the management will be transferred to Fairfax and Eurobank will retain veto power according to its share. The deal is expected to close in the first quarter of 2014. The General Meeting of Shareholders is scheduled to be held on 8 November.

Tags: Mitilineos Fairfax Eurobank Properties acquisition majority stake
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