Prem Watsa, the chairman and CEO of Fairfax Financial Holdings Ltd (TSE:FFH), made a huge investment in Eurobank, the bailed-out bank in Greece.
According to the Hellenic Financial Stability Fund (HFSF), a private legal entity responsible in maintaining the stability of the Greek banking system for the sake of public interest, Watsa’s Fairfax Financial Holdings Ltd (TSE:FFH) was among the group investors that’s putting more than $2 billion into Eurobank.
The other investors include Capital Research and Management, Wilbur Ross, Fidelity, Mackenzie, and Brookfield. The Hellenic Financial Stability Fund said the investors signed an institutional investor agreement and their investment represents 47% of the capital increase of Eurobank.
Strong progress in Greek banking turnaround
In a statement, Anastasia Sakellariou, CEO of Hellenic Financial Stability Fund said, “Today the “cornerstone investor” phase of Eurobank’s share capital increase has been successfully completed with the commitment of highly reputable and experienced Investors. … The continuing strong interest of quality investors in the Greek banks, underscores the strong progress achieved in the turnaround of the Greek banking sector.”
The investment of Fairfax Financial Holdings Ltd (TSE:FFH) in Eurobank was its third major investment Greece, and demonstrates Watsa’s contrarian approach in investing. The firm acquired a 5% stake in Mytilineos, an industrial group in Greece for €30 million last October. It also owns a 42% stake in Eurobank Properties Real Estate Investment Co.
In 2011, Fairfax Financial Holdings Ltd (TSE:FFH) was part of the group of investors including Ross that acquired a huge stake in Bank of Ireland, months after the Irish government requested a bailout from the International Monetary Fund (IMF) and the European Union (EU). Last month, Watsa’s firm and Ross sold approximately one third of their investment in the Bank of Ireland and their profit was three times their initial investment.
Commenting on Fairfax Financial Holdings’ Eurobank investment, Jeff Fenwick, an analyst at Cormack Securities is in line with its strategy over the past 25 years, which is proven to be generally successful.
Fenwick noted, “They’re looking for investments where sometimes there’s been some sort of disruption or negative event, but they still believe there’s underlying value there and a potential for recovery.”