Private equity sheds few tears over Greek tragedy

As with every crisis, there is opportunity. Expect distressed investors, or those global PE firms with distressed opportunity or credit funds to “be sniffing around” for deals, said a private equity professional. Sources pointed to Cerberus Capital Management and Oaktree Capital Management as firms likely to be interested in the area. 

“The distressed debt guys love this type of turmoil as it creates actionable opportunity,” said David Fann, president and chief executive officer of TorreyCove Capital Partners. 

Cerberus could not be reached for comment. Oaktree declined comment. 

While the troubles in Greece have roiled public markets, most U.S. private equity firms have very little exposure to the Greek crisis, several PE executives said.

“Clearly it’s a tragic affair for the Greek people,” said Russell Steenberg, global head of the BlackRock Private Equity Partners (PEP) group within BlackRock Alternative Investments. “But from the private equity perspective, this has taken a long time to unfold and there has been very little activity investing in Greece itself.” 

Hedge and credit funds likely have more exposure to the Greek crisis than private equity, industry sources said. 

There have been few private equity investments in Greece, and none has been made this year, according to Buyouts data. One deal occurred in 2014 and a couple in 2013. Before that, the last Greek PE deal took place in 2008, the year of the global financial crisis.

One of the more notable Greek deals was the purchase of Hellas Telecommunications in 2005 by Apax Partners and TPG. That deal happened during the PE boom and reportedly produced a 375 percent return for Apax and TPG.

For those few PE firms that are unlucky enough to have current investments in Greece, the situation is a “lose-lose,” a third private equity source said. “If Greece actually defaults and the country leaves the euro, then Greek PE investments will be wiped out as the country figures out how to survive in a post-European world,” the source said. 

The Greek crisis has developed over years. The country has been negotiating with the European Commission, the European Central Bank and the International Monetary Fund for aid with its debt problems since 2010, Vox said.

The situation came to a head on Sunday, June 28, when Greece’s prime minister announced that country’s banks would remain shut indefinitely and imposed restrictions on cash withdrawals. Two days later, an earlier Eurozone bailout expired and Greece missed a 1.5 billion euro repayment to the IMF. The IMF said on July 2 that Greece will need an extra 50 billion euros over the next three years to stabilize its finances, the BBC reported.

Greek citizens are scheduled to vote Sunday, July 5, on a bailout offered by the country’s creditors. 

Moody’s Investors Service has estimated that Greece’s debt is 177 percent of its GDP, which is twice the level of the United States’ debt-to-GDP.

PE sources said they aren’t worried that Greece and its 11 million people may leave the European Union. Greece’s GDP is a small part of the EU, so exposure will likely be “immaterial,” a fourth PE executive said. 

While many discounted Greece’s after-effects, there is concern the crisis could expand to other troubled countries such as Italy, Spain, Ireland and Portugal. “There is a fair amount of PE investment in these countries,” TorreyCove’s Fann said.

Greek private equity deals (2005 to present)
Date Effective	Target Name	Value incl. Net Debt of Target ($mln)	Acquiror Full Name	Acquiror Ultimate Parent	Synopsis
11/10/14	Credit Agricole Leasing Hellas SA	n/a	Sankaty Advisors LLC	Bain Capital LLC	Sankaty Advisors LLC of the US, a unit of Bain Capital LLC, acquired Credit Agricole Leasing Hellas SA, provider of sales financing services, from Credit Agricole SA.
07/02/14	Lamda Development SA	$27.60	Blackstone Capital Partners LP	Blackstone Group LP	Blackstone Capital Partners LP of the US, a unit of Blackstone Group LP acquired a 10% stake, or 4.441 mil ordinary shares in Lamda Development SA, an Athens-based provider of real estate development services, from Consolidated Lamda Holding, for EUR 4.55 (USD 6.215) per share, or a total of EUR 20.208 mil (USD 27.603 mil), in a privatelynegotiated transaction.
09/19/13	Advanced ChronoCash Services SA	n/a	MoneyGram International Inc	Thomas H Lee Co	MoneyGram International Inc of the US, a unit of Thomas H Lee Co’s Thomas H Lee Partners LP subsidiary, acquired Advanced ChronoCash Services SA, an Athens-based provider of money transfer services. Concurrently, MoneyGram International agreed to acquire MoneyGlobe Payment Institution SA.
01/29/13	Eurodrip SA	$66.39	Waarmenk Holding Ltd	Paine & Partners LLC	P&P Water Holdings(Greece) SA, a unit of Paine & Partners LLC acquired a 74.9% interest, or 33.29 mil ordinary shares, in Eurodrip SA, an Athens-based manufacturer of irrigation drips, for EUR 1.53 (USD 1.99) per share, or a total value of EUR 50.937 mil (USD 66.39 mil), from Aquanova International Holdings BV, a unit of Global Finance SA’s Global Capital Investors II LP subsidiary, and Bellaria Holding Ltd. Concurrently, P&P Water Holdings(Greece) SAplanned to launch a mandatory tender offer to acquire the remaining 25.1% stake in Eurodrip SA.
05/09/08	Neochimiki SA	$778.88	Green Bidco Commercial & Industrial SA	The Carlyle Group LP	Green Bidco Commercial & Industrial SA (GB) of the US, a new company formed by and a unit of Carlyle Group LLC’s Carlyle Offshore Partners II Ltd subsidiary, created for the purpose of making an acquisition, acquired a 73. 54% interest, or 26.474 mil ordinary shares in Neochimiki Lavrentiadis SA (NL), an Agios Ioannis Rendis-based manufacturer and wholesaler of detergents and chemical products, from Mr. Lavretis Lauvrentiadis (20%) and other undisclosed sellers, for 19 euros ($29.421 US) in cash per share, or a total value of 502.999 mil euros ($778. 877 mil), in a leveraged buyout transaction. The transaction was approved by the regulatory authority. Concurrently, GB planned to launch a mandatory tender offer to acquire the remaining 26.46% stake, which it did not already own, in NL.
05/09/08	Neochimiki SA	$280.24	Green Bidco Commercial & Industrial SA	The Carlyle Group LP	Green Bidco Commercial & Industrial SA of the US, a unit of Carlyle Group LLCs Carlyle Offshore Partners II Ltd subsidiary, launched a tender offer for the remaining 26.46% stake, or 9.525 mil ordinary shares, which it did not already own, in Neochimiki SA, an Athens- based manufacturer and wholesaler of detergents and chemical products, for EUR 19 (USD 29.421) per share, or a total value of EUR 180.981 mil (USD 280.243 mil).
01/30/08	Astron Chemicals SA	$4.43	Neochimiki SA	The Carlyle Group LP	Neochimiki Lavrentiadis SA, Res Pharma, acquired a 40% stake in Astron Chemicals SA, a manufacturer of chemical raw materials and other chemical products, for 3 mil euros ($4.431 mil US).
12/31/07	Infote	$442.61	Investor Group	Investor Group	An investor group comprised of Rhone Capital LLC (RC) of the US and Zarkona Trading (ZT) agreed to acquire the entire share capital of Infote (IN), an Athens-based publisher of directories, from Hellenic Telecommunications Organization SA {OTE SA} subsidiary, for 300 mil euros ($442.608 mil US) in cash, in a leveraged buyout transaction. On completion, RC and ZT were to own 85% interest and 15% in IN, respectively. Originally, in November 2007, OTE SA announced that it was seeking a buyer for its IN unit.
04/12/07	Syntra SA	$7.15	Spentimet SA	The Carlyle Group LP	Spentimet SA, a unit of Res Pharma’s Neochimiki Lavrentiadis SA subsidiary, acquired Syntra SA, a manufacturer of chemicals and other solvent products, for 5.3 mil euros ($7.149 mil US).
11/01/2006	Proton Bank SA	n/a	Fortress Investment Group LLC	Fortress Investment Group LLC	Fortress Investment Group LLC of the US acquired a 10% stake in Athens-based ProtonBank SA.
06/20/06	Undisclosed Chemical Plant	$4.72	Chemical Solutions SA	The Carlyle Group LP	Chemical Solutions SA acquired an undisclosed chemical plant, a manufacturer of chemicals, for 3.75 mil euros ($4.720 mil US).
01/31/06	Q Telecom	$423.19	Helen GAC Telecommunications SA	Apax Partners Worldwide LLP	Helen GAC Telecommunications, a unit of Troy GAC Telecommunications SA’s TIM Hellas Telecommunications SA, backed by Apax Partners Inc and Texas Pacific Group Inc of the US, acquired the entire share capital of Q Telecom, an Athens-based provider of wireless telecommunication services, from InfoQuest SA, for 350 mil euros ($423.186 mil US), in a leveraged buyout transaction. The consideration was to consist of 325 mil euros ($392.958 mil) in cash, plus the assumption of 25 mil euros ($30.228 mil) in liabilities. The transaction was approved by the regulatory authority.
11/03/05	TIM Hellas Telecommunications SA	$314.81	Troy GAC Telecommunications SA	Apax Partners Worldwide LLP	Troy GAC Telecommunications SA, a newly-formed company by Apax Partners Inc and Texas Pacific Group Inc of the US, acquired the remaining 19% stake, or 15.807 mil ordinary shares, which it did not already own, in TIM Hellas Telecommunications SA, an Athens-based provider of wireless telecommunications services, for 16.425 euros ($19.916 US) in cash per share, or a total value of 259.625 mil euros ($318.811 mil), in a leveraged buyout transaction.
06/15/05	TIM Hellas Telecommunications SA	$1,430.44	Troy GAC Telecommunications SA	Apax Partners Worldwide LLP	Troy GAC Telecommunications SA, an acquisition vehicle owned by Apax Partners Inc and Texas Pacific Group Inc, acquired an 81% interest, or 67.386 mil ordinary shares, in TIM Hellas Telecommunications SA (THT), a provider of telecommunications services and a unit of Telecom Italia SpA’s (TIS) 54.24% majority- owned Telecom Italia Mobile SpA subsidiary, for 16.43 euros ($21.227 US) in cash per share, or a total value of 1.107 bil euros ($1.43 bil) . Originally, in February 2005, TIS announced it was a seeking a buyer it 81% interest in THT. Apax Partners and others were named potential bidders.
Source: Thomson One, a product of Thomson Reuters. Data is as of June 30, 2015
Compiled by Paul Centopani