Greece lighting – Opportunities amongst Financial Meltdown

Miranda Karali

News stories on Greece over the past two years have been consistently full of doom and gloom. The figures certainly make for depressing reading. Never in recent times has a developed economy shrunk as quickly as Greece’s – 16 per cent in the last four years. And a further 6 per cent drop is predicted for this year. Even following the recent bond deal, which was the largest restructuring of sovereign debt in history, and which lopped €107 billion from Greece’s debt mountain, the nation is still stuck with debts of over €250 billion. Bitter austerity cuts are crippling the country, and are set to deepen over the coming decade. Unemployment is at 21 per cent and rising. The Medium Term Fiscal Strategy published by the Greek Finance Ministry recognises that Greece has become “economically, financially and socially unsustainable.”

And yet, in spite of the horror stories, the situation in Greece has now entered a new phase and is providing a number of promising business opportunities.

Tom Roberts

Following the recent bond deal that has deferred all bond repayment for 10-30 years, and as part of the agreement for extra funding agreed with Europe and the IMF, the Greek government has committed to effect a large-scale privatisation of Greece’s state-owned assets. It has initiated the Hellenic Republic Privatisation Programme in an attempt to attract direct investment in infrastructure, energy, real estate and other areas. It is a recognition that Greece needs to privatise its assets not only to pay off its debts, but also so that it can boost private enterprise, re-establish itself as an investor-friendly economy and return to global capital markets. By means of the Hellenic Republic Asset Development Fund, Greece has already committed to raising around €20 billion by 2015 from privatisation of assets, and aims to raise €50 billion overall. The assets are categorised as real estate; company shares; and rights. Amongst others, these include:

• The national lottery
• State-owned banks
• Hellenic Petroleum
• Athens International Airport
• Various utilities companies
• Natural gas storage facilities
• 39 airports
• Motorways
• 10 ports
• Numerous state-owned buildings, land and other properties

A plethora of other privatisations are in the pipeline, for example, the state-owned railway is soon set to be offered to investors. Also on the list is a full spectrum of state-owned assets: rights for exploration of oil, gas and gold, renewable energy projects, state defence companies, telecoms, marinas, hotel chains and large areas of real estate. There is plenty to excite bold investors.

Given the nature of the privatisations, driven by the government’s urgent need to raise funds, this is unquestionably a buyer’s market. It is also unchartered territory; new legislation is continually being drafted to attract potential investors and facilitate the investments in question. If investors are successfully to pursue these opportunities, it is essential they receive the right professional advice and receive it early.

If you are interested in exploring any of these opportunities further, or indeed, for further information on potential investments in Greece, please do not hesitate to speak to your usual Clyde & Co contact or to the authors of this article.

Clyde & Co in Greece

We have built up a strong Greek practice out of both London and Greece, which has been significantly bolstered following our merger with Barlow Lyde and Gilbert. The lawyers in our Greek team, many of whom are fluent Greek speakers, are specialists in the fields of corporate law, finance, insolvency and restructuring, litigation and arbitration.