Fairfax shifts attention to Greece as experts say worst is over
FAIRFAX Financial Holdings, which has seen its 2011 investment in Bank of Ireland rise about 50pc, is now focusing on Greece, betting that the worst has passed for the recession-battered nation.
"In terms of the economy, the last four or five years have been very tough for Greece," Fairfax chairman and chief executive Prem Watsa said. "The economy has come down very significantly. But on the other hand, we think that perhaps a bottom has been reached."
Fairfax said this week that it would invest €164m in Eurobank Properties Real Estate Investment Company as part of a share capital increase, bringing the Toronto-based firm's stake in the Greek property company to 42pc from 19pc.
Mr Watsa said Eurobank Properties was raising money at the right time to take advantage of a "lot of opportunities in Greece". The country's state-asset sales programme, which includes a large real-estate portfolio, has the potential to generate "significant growth" from private investors.
"We think that the prospects in Greece for Eurobank Properties will be very significant in the next five years, perhaps the next 10 years," he said, without giving any forecasts.
Shares in Eurobank Properties have more than doubled since falling to a low in June 2012, when the Athens Stock Exchange General Index tumbled as inconclusive elections stoked fears about a possible euro exit for the Mediterranean country. The benchmark ASE index has since gained 46pc.
Greece is now in its sixth year of recession, with unemployment at 27pc as it fired state workers, cut pensions and wages, and raised taxes. The economy has shrunk by about a fifth since 2008. The European Commission forecast gross domestic product will contract 4.2pc this year.
Prime Minister Antonis Samaras has vowed to meet budget-cut targets, implement structural reforms and speed up state-asset sales to satisfy the conditions of a €240bn loan agreement with the euro area and the IMF. (Bloomberg)