The government of Greece is ratcheting up their efforts to dispose of state assets ahead of a 2016 deadline. Representatives from the Hellenic Republic Asset Development Fund have had a series of meetings in New York this week with billionaire John Paulson and several of his top associates, according to directors of the fund.
According to an agreement with EU banking authorities for an earlier bailout, Greece must raise at least 11 billion euros ($15 billion) through state asset sales by 2016.
Funds expressing interest in assets
A number of hedge funds, including Paulson & Co. and Third Point LLC, have expressed interest in bidding on a number of Greek assets, according to the same sources. The group of funds interested in bidding includes several who profited handsomely off bets on Greek bonds in 2012. Analysts say the number of bidders augurs well for this round of Greek state asset disposal.
Paulson's fund purchased shares in Greece’s Alpha Bank SA a few months ago as part of a recapitalization, according to a recent Paulson & Co. client report. The fund also acquired warrants to purchase an 7.41 additional shares for each common share at a future date.
Daniel Loeb’s Third Point LLC announced this spring it’s starting a fund focusing mainly on Greek assets. Third Point has produced stellar returns on earlier Greek investments.
Improving economic climate in Greece
A number of sources also point to the improving overall economic climate in Greece as a positive for the effort to sell state assets.
“There is improved sentiment about investing in Greece,” Andreas Taprantzis, the executive director of the fund, commented in an interview with Bloomberg yesterday. “Six months or a year ago investors were coming to Greece asking for returns of 30 percent, it was surreal.”
The asset disposal fund did not get any qualifying bids for the national gas company Depa SA when it shopped the concern around in June, but the climate seems to have improved markedly over the last six months. The privatization funds plans to raise 3.6 billion euros ($5 billion) next year through asset sales. The plans currently call for selling stakes in two ports in the first quarter, as well as finalizing the sale of the huge multi-use Hellenikon SA property. Several other deals are in various stages of negotiation.