Family firms becoming more open

Greek businesspeople who have listed their companies on the Athens Exchange are gradually coming to realize that the high majority stakes which used to be the norm are no longer necessary to keep them at the helm. The phenomenon of family control that flourished in Greek businesses after World War II had meant that a firm’s founder was also the main shareholder and performed all the main managerial functions. In contrast, elsewhere in the West, traditional entrepreneurs have transferred management and simply remain as major shareholders. This situation in the Greek bourse has slowly begun to change in the last two years, in response to the gradual entry of hedge funds, private equity firms and international investment banks which continue to bring in record levels of capital. Investment banking heavyweights such as Morgan Stanley and Deutsche Bank, as well as investment funds such as Fidelity, Laxey and Schroder, appear to have had considerable success in persuading several traditional Greek businesspeople that they can continue managing their companies with much lower stakes, something which also allows them to increase share dispersion and enter the new era in which enterprises worldwide realize their considerable growth potential with substantial infusions of capital from distant sources. At present, there are 14 companies listed on the Athens bourse that would fit the description of the family enterprise, as their founders or successors remain in control and exercise management, despite having transferred substantial stakes to foreign interests. The main advantages for a firm whose founder and chief executive controls the majority of shares is that decision-making is faster and such companies are usually active in a specific field of activity and thus avoid the fragmentation which tends to grow when professional managers are hired. Family enterprises also tend to have greater flexibility on issues of cost and investment programs. On the other hand, businesses that accept the entry of hedge funds to their share capital while retaining control of management significantly improve their cash flows, acquire much greater flexibility and find it easier to enter new markets, using the global experience and contacts of the new entrants. A few notable examples of traditionally Greek family firms that have expanded far beyond the country’s borders are the following: – Cement industry Titan, of the Kanellopoulos family, continues to expand in the Balkans, especially in Albania, but it already has a presence in three continents. – The dried fruit and nuts firm of the Kardasilaris brothers, the third largest of its kind in Europe, seeks to further increase its market shares abroad, especially in neighboring Balkan countries and Turkey, after opening a new plant in Oinofyta, north of Athens. – Michalis Maillis, founder and president of the packaging and packing materials firm, is now expanding in India after Europe and the US. He is also in talks for a joint venture in the United Arab Emirates. – Aristeidis Belles, who controls Greece’s largest aquaculture firm, Nireus, is implementing a major investment program in Turkey and the Iberian peninsula. The company said yesterday it had raised -33.7 million in a share capital increase and -20 million through a convertible bond loan, 55 percent of which was unsubscribed and will be covered by banks Eurobank and Millennium. – The Kyriakopoulos family is continuing the expansionist policy of S&B Minerals through new acquisitions elsewhere in Europe. Alapis Lavrentis Lavrentiadis, who now controls 52.58 percent of Alapis, the pharmaceuticals, cosmetics and organic products firm, told Kathimerini he plans to reduce his stake to around 20-25 percent. «The important thing is that the firm’s management is exercised correctly, to the benefit of shareholders and employees. I consider that a 20-25 percent stake is sufficient for me to exercise management, as our strategic investors show confidence when you achieve high growth rates, good profitability, prudent management and low borrowing,» he says. Alapis is preparing for a major, -817-million rights issue, -600 million of which will go toward organic growth and acquisitions in Greece and Eastern Europe. According to sources, banks Sal Oppenheim, Deutsche Bank, ABN Amro, Emporiki, Piraeus and Proton have offered to make up any difference in the event the issue is undersubscribed.

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