Local firms prepare to ‘buy’ Greece

One’s crisis can be another’s opportunity, as seen today from the ongoing fiscal turmoil in the euro zone. While southern European nations are trapped in a mounting debt crisis, Korean firms are preying on those ailing European companies for possible low-priced mergers.

Recently, Woori Investment & Securities sent a group of officials to Greece - one of the southern European countries seeking rescue from high debt along with Spain, Italy and Portugal - to look for business expansion opportunities in the financial sector. The brokerage unit of Woori Finance Holdings is considering investing in a Greek firm jointly with other Korean private equity firms or corporations that are interested.

“Investment opportunity is significantly high right now because Greek companies are on sale for mostly giveaway prices,” said an official from Woori. “They include large-sized public firms as well as private ones.” Korean firms that have expressed interest in seeking merger opportunities in the European region are mainly financial firms as well as private equity funds and private investment firms.

According to the Korea Trade-Investment Promotion Agency (Kotra), Greece will be active in putting its firms up for sale this year and next year, many of which have high industry market share in the European region in various sectors, including gambling, electricity, gas, and defense. One of them is the lucrative, Greece-based gambling company OPAP, which last year alone raised 4.9 billion euro ($6.8 billion) in sales and 893 million euro net profit. The sale of the cash cow OPAP was initially planned for this year but has recently been delayed to next year. The debt-choked country is also planning on selling the Hellenic Postbank, Larco Mining, Public Gas Corporation, Athens International Airport and the National Bank of Greece. The Greek government has hired global investment banks, including Deutsche Bank, BNP Paribas and Ernst & Young, as its sales advisors.

Based on the terms of the European Union and the International Monetary Fund bailout plan for Greece, the country must raise 50 billion euros by 2015 from selling stakes in public firms and other assets to amplify its capital to cover up its debt. This year, Greece’s debt is expected to reach 162 percent of its gross domestic product.

“It is very important for the country to complete the privatizations mission and regain credibility. This is even more important than proceeds,” Costas Mitropoulos, chief executive of the Hellenic Republic Asset Development Fund, was quoted as saying by Reuters last week.

According to Kotra, Greek government officials are welcoming Korean firms to invest in them, advertising to Korean companies that they will be able to gain a foothold on expanding businesses, especially on the Mediterranean coast, by investing in infrastructure like airports and harbors.

Mirae Asset Financial Group has also recently expressed its intention to purchase a luxury Italian brand. The name of the brand that the financial group is seeking to purchase, however, hasn’t been revealed, though there are many Italian luxury brands, including Gucci, Armani and Benetton. Italian firms are also currently facing a credit crunch triggered by market jitters over the country’s public finances. According to industry sources, the financial group’s chairman, Park Hyeon-joo, recently told his high-level staff to keep an eye on potential sales of other European companies and be aggressive in seizing opportunities to buy them at low costs. Earlier this year, Park told the media that there will be three to four mega-deals this year, following its deal in jointly acquiring Acushnet Company, the world’s largest golf equipment company, part of the Fortune Brands corporation. The move was seen as part of efforts to target the Chinese market, where demand for luxury items such as golf clubs is growing.

Samil PricewaterhouseCoopers, the Korean member firm of the London-based services firm PwC, has also recently put together a task force as part of efforts to prepare investments in Greece and Italy.

By Lee Eun-joo [angie@joongang.co.kr]