By Yiannis Papadoyiannis
Fairfax, Capital Research and Management, Wilbur Ross, Fidelity, Mackenzie and Brookfield are the strategic investors comprising the consortium that will cover almost half of Eurobank’s 2.86-billion-euro share capital increase following the signing of an agreement on Tuesday with the lender’s board.
As approved by Eurobank’s main stakeholder, the Hellenic Financial Stability Fund (HFSF), the deal commits the abovementioned international investors to participate in the share capital increase with 1.331 billion euros, or 46.5 percent of the increase. The lion’s share will belong to Fairfax and Capital Research, which will place about 1 billion euros between them, with the share price at 0.30 euros.
This development reflects the particularly strong investment interest in Greece and its banking system by foreigners who are banking ever more aggressively on the scenario favoring the country’s rebound. It follows the successful share capital increases by Alpha and Piraeus which totaled 2 billion euros.
The agreement commits Fairfax and Wilbur Ross to holding on to their shares for at least six months after the completion of the increase process, while they have expressed their intention to have a role in Eurobank’s corporate governance. They will acquire their stakes through the book-building procedure that will start at the same time for strategic and for other foreign investors. In Greece the sale of shares – about 10 percent of the issue – will take place through a public offering.
The book will open at the end of April, once the necessary regulator approvals are secured, and the bank’s administration is aiming to have the process completed by April 30. According to Tuesday’s deal, if the final price of the shares is above 0.30 euros, then the investors would not have to exercise their rights, although analysts are taking it for granted that the increase will take place at the price of 0.30 euros.
Once the 9.5 billion new shares are issued and 30 percent go to the strategic investors, the HFSF stake will drop from 95 percent today to 35 percent, while the remaining 35 percent will go to the private sector.