Arab funds seeking new investment options

Greece appears to be slowly but steadily developing into one of the foremost European investment destinations preferred by Arab businessmen. Further evidence of this is provided by the recent acquisition of a 21 percent stake in telecommunications company Forthnet by Emirates International Telecommunications Ltd (EIT), showing also that telecoms is among the most attractive markets for Arab capital. Moves by Arab groups in Greece further demonstrate that Arab investors are prepared to pay whatever it takes to get their hands on certain assets of interest to them. What lies behind this trend, according to market experts, is the fact that Arab investors enjoy high levels of liquidity as a result of an ongoing oil price race, as well as Greece’s proximity to other countries carrying Arab investments. On the other hand, the generous investment of Arab capital in Greece may equally be the result of strong skepticism shown by other nations, primarily the US, about Arab investments, either in their wider region or in the West in general. It was only last year that the American Congress turned down a scheme under which Dubai Ports would undertake the operation of nine US ports, even though the project had initially been approved. In the past two years, Arab capital has entered Greece in a big way. In 2007, investments in telecoms alone stood at just under -6.0 billion. The takeover of TIM Hellas (since renamed Wind Hellas) was valued at -3.4 billion, while another -2.0 billion was poured by Marfin Investment Group (MIG) into acquiring a 19.6 percent stake in the Hellenic Telecommunications Organization (OTE). Of course, MIG’s equity is not entirely of Arab origin, but Dubai Investment Group’s stake in MIG of 9 percent will soon rise to between 15 and 20 percent, according to a recent announcement. Recently, telecommunications company Tellas (formerly a Public Power Corporation subsidiary) was bought out by Egyptian telecoms magnet Naguib Sawiris’s Weather Investments group for -175 million. Sawiris has also expressed interest in a small Greek bank (according to rumors, the bank is Geniki, currently owned by France’s Societe Generale), as well as other businesses in the sectors of entertainment and mass media. EIT’s investment in Forthnet – still pending approval by domestic authorities, is valued at -94 million. However, it is expected that EIT’s penetration of the Greek market will continue, given that the Arab company’s administration is very likely to announce an attractive business plan. Forthnet, on the other hand, is eyeing Nova, a digital satellite pay TV platform, valued at around -500 million. Nova has drawn interest also from MIG and television station Antenna. But Arab investments in Greece are not only limited to telecoms. For instance, MIG has acquired stakes in a number of businesses from coastal shipping companies to food industries. However, telecoms is a far more promising sector, offering excellent growth prospects particularly in broadband. In addition, Greece’s geographical location perfectly suits Arab expansion plans. Interestingly, EIT controls stakes in a number of major telecoms providers in Malta and Tunisia, while Weather Investments holds telecoms stakes in Italy, Greece, Egypt, Algeria and Tunisia. Credit institutions are also of special interest to Arab investors, with Dubai Investment and Marfin already jointly owning Marfin Popular Bank (MPB). This, according to reports, is likely to act as the basis for boosting Arab banking activity in both Greece and the wider region of Southeastern Europe. Reports say that MIG has already contacted Alpha Bank management, with a view to forming a strategic alliance, may also concern the Postal Savings Bank. Meanwhile, the Sawiris group is said to be interested in Geniki Bank, but current majority stakeholder Societe Generale is unwilling to even sit at the negotiating table. But Sawiris’s interest is still there and the group is most probably just waiting for the right moment to make a move.