More private equity buys of Greek firms on the way

At least four large foreign private equity funds are currently targeting Greek firms with individual capitalizations of more than 250-300 million euros, according to PricewaterhouseCoopers (PWC), the firm of financial consultants. The finding is contained in PWC’s fourth annual report on «Acquisitions and Mergers of Greek Enterprises in 2005,» presented at a press briefing yesterday. Private equity firms aim at realizing capital gains through the buyout, development or restructuring of the acquired firms, which they then usually sell at a handsome profit. «The deregulation of certain markets, such as telecommunications and energy, as well as the growth of overseeing and maturation of the capital market in Greece has attracted the interest of foreign investment capital,» said Emilios Yiannopoulos, head of PWC’s financial services department. He noted that private equity acquisitions in Europe are dominated by increasingly energetic UK-based firms, which are now seeking new opportunities further afield. PWC foresees an intensification of buyouts of Greek companies by private equity firms this year and next. According to the PWC report, in these two years banks will continue rationalizing their subsidiaries and investment portfolios, freeing capital for investment in southeastern Europe. It sees concentration trends gathering pace in the food manufacturing sector and forecasts developments related to the deregulation of the energy sector. The report notes that the Greek telecommunications sector showed among the highest after-tax price/earnings (P/E) ratio, which it believes indicates a trend among investors to discount further growth and profitability. The total turnover in trading at the Athens Stock Exchange rose 114 percent in 2005, and foreign placements rose from 1.4 billion euros in 2004 to 2.4 billion. Greek firms are increasingly seeking to consolidate their presence abroad. In 2005 they spent a total of 4.3 billion euros for acquisitions. Private equity firms made nine acquisitions in Greece last year, and the five for which data was published totaled 1.8 billion euros in value. Of the nine, five were foreign companies which invested in Greece (1.7 billion euros) and the other four were Greek firms which invested 12.4 million euros. The biggest transaction involving a private equity firm last year was the acquisition for 1.4 billion euros of mobile phone operator TIM Hellas by US-based Apax Partners and Texas Pacific, which then went on to fully buyout Q-Telecom.