Investment firms entering into period of realignment

The open-ended investment fund sector is about to undergo extensive changes; big and established firms with almost trademark status will soon be a thing of the past, while the relative weight of the sector as a whole is projected to shrink. The continuing doldrums of the stock market and the announcement two weeks ago of the planned absorption of two big funds – Ergo Invest and Investment Development Fund (IDF) – by their parent EFG Eurobank Ergasias is no doubt causing a considerable shrinkage in assets, and the occasional listing of a new fund on the bourse does not change the overall picture due to their small size. Besides Ergo Invest and IDF, the funds projected to disappear from the list include Piraeus Investment (to be absorbed by Portfolio Investment) and Alpha Trust Orion which will be merged with Alpha Trust Andromeda. EFG Eurobank’s absorption of the two funds surprised the market, as no one expected it. Senior group officials stressed the benefits, particularly on the bank’s capital base, since the two funds will be absorbed at a discount of more than 10 percent. Others suggest that the move for Ergo Invest was designed to leave out the old guard that has survived since the group’s takeover of ErgoBank two years ago. In particular, they single out Ilias Stasinopoulos, Ergo Invest’s chairman, whose purchase of 400,000 shares only days before the bank’s announcement of the absorption is now under investigation by the Capital Market Commission. They point out that it is not the first time he has attracted attention for «unorthodox» practices, resulting in negative publicity for the group. In any case, EFG Eurobank’s move is seen on the whole as reflecting banks’ anxiety toward boosting their capital base. This anxiety has given rise to rumors that the next fund destined for absorption is Greece’s biggest open-ended investment fund, Alpha Invest, a subsidiary of Alpha Bank, with assets of 305 million euros and a share currently traded at more than 30 percent discount. An absorbtion does not appear likely, however, for if banks were to enter into a race to absorb investment fund subsidiaries, it would practically drive the sector to shut down. Alpha Invest and the investment arms of the National and Commercial banks, with respective assets of 172 million and 83 million euros, together account for 40 percent of the assets left after the exit of Ergo Invest and IDF from the sector. A foreign fund called Laxey is said to be eying Progress Fund, while Kontalexis Securities is said to be eyeing Exelixi, managed by Proton Bank. Realignments must also be expected in the small funds. Currently, there are 10 funds being traded, with assets of less than 30 million euros each, and their number is projected to increase in coming months as most non-listed firms are of a small size. Such schemes are not considered to have good viability prospects, particularly in today’s lackluster environment. Mergers seem to be the order of the day as revenues and asset values fall.

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