Hedge funds line up for cheap Greek businesses

9 August 2016
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International hedge funds are vying for the acquisition of many Greek companies in the red and non-performing loans from Greek banks. Nearly 60bln Euros of non performing loans by Greek companies have drawn the attention of tens of hedge funds interested in taking advantage of the abysmal state of many domestic businesses. The hedge funds are adopting a cynical, yet legal approach, as they are trying to either directly buy out companies in dire straits or take control of their (companies’) non-performing loans to Greek banks. An increasing number of hedge funds are changing their stance lately, as they prefer to buy the companies in auction sell offs at a much cheaper cost, rather than deal with the companies’ ownership directly.

Hedge funds consider the cost of a direct buyout extremely high given the large debts Greek businesses are carrying and the poor state of the domestic market. A characteristic example is the buyout of TRAINOSE by Italian group Ferrovie Dello Stato Italiane for a mere 45mln Euros, a price way below the train company’s equity. The recent changes in the bankruptcy law deriving from the 3rd memorandum has made it easier for foreign hedge funds to swoop in and take over, as it provides that the liquidation procedures for companies in financial duress are expedited. Meanwhile, bankers are also involved in the ongoing ‘struggle’, as credit funds are pressing Greek bankers to accept prices for the acquisition of non-performing loans at 20% of their nominal value, arguing the Greek bankers do not proceed with the deals in a speedy fashion.

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