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Monday, May 27, 2024

Eurobank valued Hellenic at 1 billion

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Questions arise why he “rushed” to buy at a time when bank stocks are high

Αποτiμησε την Εληνι&kappa ;or στο 1 δισ. η Eurobank

ΑποτΙμησε την Ε λληνικor στο 1 δισ. η Eurobank

By Panagiotis Rougala

Eurobank has agreed to acquire an additional 17.3% stake (71,428,572 shares) in Hellenic Bank for a total price of 167.9 million euros, or 2.35 euros per share. This percentage belonged to Pimco, or Poppy S.à r.l., the investment fund that entered the period when Hellenic Bank acquired the good part of the Partnership.

After Eurobank's move to acquire 17.3% of Hellenic by paying 167.9 million euros to Pimco – doing the calculations – it is currently valued “in Eurobank's eyes” at just under 1 billion euros. When Eurobank first bought shares of Hellenic Bank in the summer of 2021 from Third Point (the investment fund owned 12.6% at the time), it bought them at 1/3 of the price it bought the current ones from Pimco. Evidently, Eurobank sees an investment opportunity in Hellenic Bank and with prospects, however, questions arise as to why it “rushed” to buy Hellenic shares at a time when bank shares are high due to high interest rates. If it had waited until next year for example, bank stocks as interest from lower inflation might have traded lower.

The truth is that Eurobank has already gained from its participation in Hellenic, from the 29.2% it held until “yesterday”. Eurobank's adjusted pre-tax profit for the half-year 2023 fell from 29.2% to €712m and adjusted net profit to €599m. As noted in Eurobank's financial results announced on July 31, 2023, total net profits amounted to 684 million euros and mainly include a 111 million profit from the acquisition of a stake in Hellenic Bank. 44% of adjusted net profit came from operations in Cyprus (adjusted profit €90m) and 49% of that in Bulgaria (adjusted profit €101m), according to Eurobank.

Probably he sees that Hellenic will generate further profits due to interest rates and the liquidity it has deposited in the European Central Bank and generates profits of millions of euros like a “hen with golden eggs”.

Is it going for at least 2.35 euros per share?

After the completion of the acquisition, Eurobank's participation will reach 46.5%. Upon completion of the transaction, Eurobank will have to make a mandatory “public offer” for all Hellenic Bank shares that will not belong to it at that time. Now, after making an offer for 2.35 euros per share to Pimco, for the next rate increases it has “locked in” 2.35 euros per share and will have to offer at least this amount to the remaining shareholders as banking sources convey to ” K”.

Be that as it may, Eurobank is proceeding with the plan that has been prescribed since July 2021, that is to acquire Hellenic Bank in its entirety. Since then, he has bought shares in Third Point, Wargaming, Senvest and now Pimco. At first it bought 12.6% of Hellenic Bank's shares, then 13.4% of Wargaming's shares in Hellenic and then 3.2% of Senvest's shares in Hellenic.

Major shareholders besides Eurobank will now remain Demetra Holding Plc with 21.3% and Wargaming Group Ltd with 6.8%. The “remaining” shareholders of the bank have 23.5% of it.

From now on, the movements we will see within Hellenic Bank and also at Eurobank Cyprus will be of interest, as the actions of the parent company will change the banking map of Cyprus in the coming months.

Entered Cyprus for NED

When Hellenic “joined hands” with the Partnership, Hellenic would proceed with a share capital increase of 150 million euros, with a subscription price of 70 euro cents per share in cash, of which 100 million would be through the issuance of preferential rights to existing shareholders and 50 million euros through a private placement in BRAVO Strategies III (BSIII), i.e. Pimco which Bravo Strategies later renamed Poppy Sarl.

Pimco from an investor to a bank turned quite quickly into a huge buyer of non-performing loans (NPLs) on the island, creating the company “Themis Portfolio Management Ltd”. He bought 2 large MDL packages from Bank of Cyprus, “Helix 2” and “Helix 3”, but also recently the MDL from Hellenic Bank, “Starlight”. Together with “Starlight” it also bought the Hellenic Bank's service company, APS Cyprus.

It is obvious that the Fund initially entered the island for another “business”, in the end it turned out that it was interested in another direction.

Source: www.kathimerini.com.cy

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