Even as the Greek government scrambles to repay its debts and the economy shows little sign of improving, behind the scenes investors continue to eye the country with interest.
If you want to buy low, this is the place.
Mark Mobius, a veteran investor and the emerging markets fund manager at Franklin Templeton Investments, sees Greece as a viable investment option.
“From a long-term perspective, there is an opportunity to invest in companies that are undervalued and provide good upside,” says Mr Mobius, who oversees some US$40 billion.
“There is a belief that if the government is not able to pay its debts, then the entire financial sector will be dissolved. However, if you look at the balance sheets of a number of financial institutions in Greece, you will see that only a small part of their assets are in Greek government debt. As the economic recovery takes place in Greece, the financial institutions will then stand to benefit,” he adds.
He is not alone in encouraging investors to look at Greece more favourably. Despite the country’s negative investment image, there are still those willing to invest in Greece, and plenty of hands on the ground to help them do it.
Whether from caution or confidence, none of the local experts who were interviewed for this article mentioned a euro exit – whether as a Grexit or a Graccident – as even a possibility.
RSM Greece is a subsidiary of RSM International, a global full-service accountancy. The firm has been active in Greece since 1991 and has offices in Athens and Thessaloniki.
Athos Stylianou, managing partner at RSM Greece, stressed that current conditions make investment in Greece a unique opportunity.
“Significant reforms are obviously bound to happen at this stage, independent of the political profile of the current government. Things can only improve.”
He emphasised that Greece’s financial services professionals were of a high calibre, and are well positioned to do business with investors from the Arabian Gulf states.
“Greece has traditionally enjoyed excellent relations with the countries in the Gulf region. We have already seen some investments by funds and private investors from the Gulf region, mainly in the tourism and property industries.”
An example is last year’s joint deal between Greece’s Lastis, China’s Fosun and Abu Dhabi’s Al Maabar to develop the old Hellenikon airport in Athens. (That deal, however, also shows the obstacles that remain to investing in Greece. In September, the plan was delayed after a Greek court said bidding for the land had not been transparent enough).
In recent years, Mr Stylianou said, investors’ interest in Greece has evolved. “Whereas in the past investors were interested more in the production of products and services, we have seen a shift of their interest to tourism, real estate, transportation, logistics and minerals,” he said.
The Greek branch of the multinational professional services giant, PwC has two Greek branches, one in Athens and one in Thessaloniki, with about 900 staff in total.
Costas Mitropoulos, executive director of PwC Greece, said the economic crisis has created low asset prices across the board and set the foundation for growth that will benefit the country once the crisis subsides.
“Greek financial institutions have been hit hard in the course of the crisis. However, they have been fully recapitalised. Clearing the non-performing loan backlog will provide ample opportunities for investors, while through the same process banks will become again ready to support new investments,” Mr Mitropoulos said.
He noted that there had been a significant interest from strategic and financial investors alike, and that investors are now keenly watching to see what happens next in the country.
“Bouncing back from the recession will give the country many years of high and uninterrupted growth. The combination of relatively low asset prices, expected growth and low levels of institutional and political risk render Greece an obvious investment destination.”
Once Greece’s future is clearer, Mr Mitropoulos highlighted several investment opportunities that are available to investors from the Gulf states, including acquiring shares or derivatives on the Athens stock exchange, real estate with emphasis on hospitality, consolidation or new developments, infrastructure through public-private partnerships (ports, marinas, waste management, interconnections etc) and direct equity investment or co-investment in corporates.
At the Greek operation of international professional services firm, which has had a presence in Greece since 1971, Marios Kyriacou, a senior partner, said the potential is there but must be handled with care.
“Greece’s investment potential mainly lies in its role as a regional commercial and transportation hub, its leading position in industries such as tourism and shipping and the unexploited potential of agriculture, the privatisation programme and the rapidly evolving financial services sector,” said Mr Kyriacou.
During the elections of June 2012 and until December 2014, KPMG Greece was approached by variety of foreign investors interested in examining acquisitions, mergers, disposals and joint ventures. With the current climate, investment opportunities for the more adventurous are still ripe for the picking.
Like Mr Stylainou, Mr Kyriacou emphasised the high level of knowledge and experience of the local financial talent in Greece as an incentive to investors. “The recent crisis offered a unique opportunity for financial institutions to evaluate their asset base in the light of a more competitive environment and reposition themselves with services that are in demand from foreign investors.
“The fact that the Greek macroeconomic environment is almost unique in a global scale, provided unmatched opportunities for those financial services professionals who are involved with international investment projects.” he said.
“I think that the key for Greece to encourage investments from the UAE is its ability to implement structural reforms and promote opportunities with high investment returns, which are becoming harder to find in other saturated western markets.” said Mr Kyriacou.
He added that a severely devalued market has thrown out investment opportunities that have been picked up on by international clients, such as transportation, tourism, agriculture, renewable energy etc.
Perhaps one of the most interesting features of the economic crisis is the way in which investors looking to Greece have turned to boutique firms. One such company is Athens-based Ionian Capital, founded in 2013 by Spyros Martsekis.
It is an independent advisory company with a focus on dealmaking.
“We’re unique because this is the only thing we do. We act on both the buy side and the sell side, meaning that we are helping firms to raise capital for existing or future projects,” Mr Martsekis said.
Their average deal size is €150 million (Dh613.3m) to €300m, and they now have their sights set on the Middle East.
“What we plan to do in the Middle East is to help the major groups, family offices, conglomerates etc attract suitable investor for them for medium sized or mega-projects,” said Mr Martsekis.
“The whole Gulf region represents for us a good opportunity both on the buy and on the sell side.”
He perceives a cultural fit between the Greeks and the Middle East populations based on the millennia-old cultural and commercial exchanges between the two populations.
“I would say that there is an inherent trust between ourselves and people in the region. Anything that is based on trust makes a transaction easier.”
The firm’s focus is on Greece, Turkey and Cyprus in terms of regions and, as opportunities arise, the Balkans and central Europe with a view to reaching new markets in the Middle East.
Despite launching in the depths of a recession, Mr Martsekis based Ionian Capital in Greece because he believes that the country’s troubles have created a great deal of opportunities for those who know where to look.
“The whole region is changing and more opportunities will be coming in the region over the next five to 10 years. In terms of business opportunity targets, we feel that there will be plenty over the next years in this region.“ he says.
So far, his belief seems to be shared. “We have seen a lot of global capital firms visiting the country,” Mr Martsekis says. “Hopefully, Greece will continue to support and create a friendly environment for global investments. I’m quite optimistic that this trend will not stop.”
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