The 109-bln-euro investment fund sweeping Greek companies

When in 2017 the US investment group CVC Capital Partners first appeared in the Greek market, no one had imagined that three years later it would be one of the largest foreign investors in the country in an array of industries.

Health, food, hospitality and, as it turns out, the insurance market are the areas that Americans chose to invest in Greece, as the Greek economy offers opportunities for high returns on maturing investments made with relatively low valuations.

In his recent statements, Alex Fotakidis, representative of CVC Capital Partners in Greece, emphasized that: "we have been active in Greece since 2017 and today our portfolio exceeds 500 million euros. Going back, what surprised us was the human capital. The talent, that is, that exists in the country. The political-economic environment is very supportive for investments, while we have a close cooperation with the banks. All the transactions we made, after all, were completed after discussions with them."

"Our view is that in the next five to six years the country will grow faster than the rest of Europe and, therefore, we will continue to invest in it. We are not looking to come and acquire assets that we will sell in a short time, making quick profits. Our goal is to invest for five to seven years. We are looking for market leaders, with a strong management team and a vision for further development," he added.

CVC's investment strategy

However, the presence of one of the largest private equity funds in Europe in Greece has prompted several discussions among the country's economic and business circles regarding the positive and negative aspects of these investments.

On the one hand, it is seen as positive the fact that a fund with access to large amounts of capital can boost significant businesses during this difficult phase for the Greek economy, which is going from the steep crisis of the last decade and the pandemic to a period of normality.

At the same time, however, many point out that investors like CVC move in a highly speculative manner, seeking to maximize returns in a relatively short period of time, without providing long-term support, as the ultimate goal is a profitable exit. These are "transitional" investors, but useful for a period where long-term investors are reluctant to take on investment risk in a high-risk economy.

In recent years there have been different views regarding how profitable the presence of CVC, and other similar investment companies, is when it comes to owning parts of companies. It is certain that CVC has secured large returns on investment management funds and its partners - the fund utilizes a mix of funds from its partners, private investors and lending, but not necessarily in a beneficial way for the companies it buys.

As a rule, CVC has an investment exit strategy that runs for five years. The aim is to derive the most from the profitability of the companies it acquires, but also from the sale price of their stake at the end of the investment period.

One of the most well-known cases of a CVC investment was the one in Formula 1, which had the longest duration, after more than a decade (2006 to 2017, when it was sold to the American Liberty Media). According to reports in the international press, many accused the investment company of harming the top racing event in motorsport, in an effort to maximize returns from the management of television rights.

As reported, all efforts were made to extract as much money as possible from the sport and to invest as little capital as possible". The result for CVC, however, was more than satisfactory, as it invested 1.4 billion pounds to take a majority in F1, while F1 is estimated to have provided CVC with around 3.5 billion euros, in a 350 percent rate of return.

The Greek investments

The American fund, during its years of presence in Greece, has taken positions in key sectors - it already controls 30% of the health market. In 2017 it acquired Metropolitan and Iaso General, while in 2018 it acquired 70.38% of Hygeia for 204.4 million euros, which also owns the maternity hospitals "Mitera" and "Lito". CVC's placements in the field of health are made through the company Hellenic Healthcare, which it holds 60% of.

In January 2019, in a move that no one expected the fund proceeded, through its subsidiary Venilia Investments to buy a stake in the marina management and yachting sector, acquiring the marinas of D-Marin, which were under the control of the Turkish company Dogus. Venilia Investments acquired D-Marin in Greece, Croatia and the United Arab Emirates. On Greek soil, the acquisition concerns the marinas of Zea, Gouvia in Corfu and Lefkada.

This was followed last May by the acquisition of 49% in the share capital of Skroutz, with CVC Capital entering a rapidly growing market in our country, such as that of online commerce, which has clearly received further impetus from the pandemic. .

The latest acquisition of the investment company is, of course, Vivartia, through which it enters both the food and catering industry. Following the agreement with MIG, CVC has acquired 92.8% of Vivartia. The valuation amounts to 600 million euros, which includes taking on all Vivartia loans amounting to 425 million euros.

The next acquisition target is none other than Ethniki Insurance, with CVC entering (if the agreement is completed in December as expected) the Greek insurance market. The fund wants to acquire 80% of Ethniki Insurance, with the prive being close to 460 million euros.

Who is CVC Capital Partners

CVC Capital Partners, a non-listed private equity buyout and credit fund, was set up in 1981 as the European arm of Citicorp Venture Capital (CVC), established in 1968 as a subsidiary of Citibank for the provision of investment funds to new companies.

CVC Capital was weaned from the American banking group in the early 1990s, when Michael Smith and other executives successfully negotiated its spin-off and began operating as an independent investment entity.

Today, it manages more than $109.1 billion. To date, it has invested more than $160 billion worldwide, in more than 300 investments.