12° Nicosia,
14 July, 2024

Funds are investing in Cypriot banks

They have been eyeing the country's credit institutions for the last five years because their shares are cheap

Panayiotis Rougalas

Panayiotis Rougalas

Investing in Cypriot banks is becoming more common. The progress they have made in terms of the non-performing loan burden they have shed, their capital adequacy, which is characterized as good, the profits expected as interest rates rise, and the cost cuts they have implemented have transformed them into an appealing investment outlet. Senvest Management increased its holdings in the Bank of Cyprus to a healthy 8.06% on Monday.  The Canadian investment fund that sold its 3.2% stake in Hellenic Bank to Eurobank is seen investing more heavily in Bank of Cyprus stock only ten days later. It increased from 7.11% to 8.06%, making the fund the third largest shareholder in the bank and very close to CarVal Investors, the second largest shareholder in Tr. Cyprus, which has 9.07%. Over the last three years, the Canadians have established a strong position in the bank. The fund held 3.67% of the Bank's share capital in 2019, rising to 4.02% in November 2020. They increased their stake to 5.01% in 2021, and to 6.01% in February 2022.  Since then, they've risen to 7.11% in a year, with the fund reaching 7.79% at one point and now sitting at 8.06%.  Senvest was also one of the buyers of a €300 million Bank of Cyprus secondary capital bond in April 2021. The Fund has shown faith in the Bank of Cyprus, and it appears that the proceeds from the sale of Hellenic shares were invested in Bank of Cyprus.

In addition to purchasing many Senvest shares, CarVal Investors, the Bank's second-largest shareholder, has purchased several Senvest shares in several Tr. Cyprus share purchases. Carval, like Senvest, made another share purchase during the summer, becoming the second largest shareholder after LoneStar Funds hammered the entire Bank of Cyprus acquisition. It specifically increased from 8.57% to 9.07%. It has "entered the Bank of Cyprus dynamically" since early 2020 when it purchased 3.11% of the bank. It increased its stake to 4.23% between 2020 and 2021, reaching 5.4% in April 2021.  From there, it increased to 6% in June of that year, and in September 2021, it switched to 8.57% of Bank of Cyprus by purchasing 2.57% of BOC shares. As previously stated, in August 2022, with all of LoneStar's "close marking," he purchased more shares and now owns 9.07% of the company.

Senvest was also one of the buyers of a €300 million Bank of Cyprus secondary capital bond in April 2021.

Caius Capital has also done a lot of position-building in Bank of Cyprus, which has financial instruments in addition to shares. Caius Capital owns 1.05% of the bank and 5.90% of the financial assets. In June 2019, the fund purchased financial instruments from the bank, bringing it to 3.09%.  In July of the same year, it was 4.21%, and in September of 2021, it was 5.07%. It reached 6.01% two months later, and 7.09% in January 2020. Since then, it has been constantly selling and buying shares and financial instruments, and it now has the aforementioned percentage, making it the Bank of Cyprus's fourth largest shareholder.

Despite holding the eighth position in the Bank of Cyprus share capital, the American investment fund Eaton Vance Management is linked to Morgan Stanley and has built up a respectable position in the Cypriot bank. Prior to 2020, the fund had a 3.22% stake in BOC, which it increased to 3.46% sometime in 2020 and again in May 2022 it reached 4.08%.

While discussing funds extensively, the offer of the LoneStar Funds investment fund, which attempted to acquire the Bank of Cyprus in its entirety from May 2022 to September 2022, cannot be overlooked. Since May 2022, the fund has made three acquisition proposals to Bank of Cyprus, all of which have been rejected by the bank's Board of Directors. The most recent offer was EUR 1.51 per share. The first proposal was received on May 5, 2022, at a price of EUR 1.25 per Bank of Cyprus share, the second on May 25, 2022, at a price of EUR 1.38 per Bank of Cyprus share, and the third on July 8, 2022, at a price of EUR 1.51 per share.

Interest in Hellenic in 2018

Hellenic Bank drew the most attention from investment funds in 2018 when it acquired the healthy portion of Synergatism. At the time, funds like Lone Star Funds, J.C. Flowers, and Atlas Merchant Capital were "short-changed" for the capital increase needed to complete the bank's absorption, which would be split into two parts. None of the three failed to participate in the capital increase for various reasons, but the one fund that did eventually participate was the US investment fund Pimco. It entered the capital increase that Hellenic Bank would require in order to cover the EUR 150 million required to absorb SCT's assets.  Emma Capital was also waiting in the 'corner,' having agreed to acquire up to 17.3% of Hellenic Bank by subscribing shares for a total of up to EUR 50 million.

As previously stated, Canadian Senvest, the third largest shareholder of Bank of Cyprus, has also invested in Hellenic Bank. Senvest's stake in Hellenic now stands at 1.8%, following the sale of 3.2% of shares to Eurobank one day before the 2022 expiry date. It used to own 5.1% of Hellenic Bank.

Despite being Cypriot, the fund that was previously the largest shareholder in Hellenic Bank is none other than Dimitra Investment. Demetra Investment owns 21.3% of Hellenic Bank and is a fund that has expressed confidence in the bank prior to the absorption of Synergatis.

[This article first appeared on Kathimerini's "Oikonomiki" edition and was translated from its Greek original]

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