Transcript Main Message

7th Venture Capital Forum
June 2006
Investing in Greece
(or through Greece)
George Kourtis
President, HVCA
Partner, Global Finance
VC and PE in Greece and the Region
Greek Venture Capital & Private Equity industry has been active in
Greece and the South East European Region since early ‘90s
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Some size; with successful investment track record
Opportunities in Greece but also difficulties in business environment
From Greece but active in the Region:
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Romania, Bulgaria, FYROM, Albania, Serbia (but also Russia, Ukraine
and CEE countries)
With or without VC funding, Greek companies invest abroad
With stable (politically and economically) Greece, VC & PE may find
in the Region
Business growth for existing Greek portfolio companies or
 New, local investment opportunities,
in a high growth environment with lower (than in recent past) risk profile
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Greek VC industry map
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Far from being a mature industry, Hellenic Venture Capital
Association (HVCA) has 15 members, all the industry participants:
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Five Private Equity firms
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Leveraged Buyouts - majorities,
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Large growth deals, pre-IPO - minorities
Six Venture Capital firms
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Early-stage, minorities
Expansion capital deals, small-medium size companies
Three Incubators
 One fund-of-funds (TANEO, state controlled)
Five controlled by Banks and nine independent
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Total Size of Industry currently under management estimated at €
1.50 billion – about half available for investment
Supply-demand of Capital in Greece
Greek PE
VC & PE
TANEO-Backed VCs
Incubators
0
0.1
0.2
0.5
1
2
3
5
10
20
50
100
500
1000
… to cover the existing gap
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… of financing between Incubators and VC Funds at the
riskiest part of the market
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Digital Leap Fund: state sponsored VC Fund (Information
Society)
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Size: € 100 M VC Fund
To finance SME, ICT companies during early-stage
Expect to invest in 30-50 companies in next two years and
hoping to create a long-lasting leveraging effect on current
and new ICT companies and Innovation
Mid-term benefit: financing of better companies will provide
quality ICT deal flow for VC Funds in 3-4 years
Long-term benefit: for the whole Greek economy
Invest in Greece
Stable economic and political background, solid continued growth of
GDP (mainly consumption-driven), improving macros, inflation under
control
 Good infrastructure (highways, telecom networks etc.)
 Government initiatives to boost activity: PPPs (ΣΔΙΤ), privatizations
 Positive VC legal framework (AKES)
but also …
 Large part of economy still owned or controlled or greatly influenced by
the State
 Service-mainly economy; large importer of goods
 Small entrepreneurial appetite for risk
 Complex tax and legal environment limiting activity and sectors (i.e.
“basic shareholder”)
 Greek Pension Funds not allowed to invest in VC & PE Funds
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Opportunities still exist …
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Absence of IPO market in ASE
Growing Interest Rates
Less risk-taking Banks (Basel II, consumer credit preference)
Insignificant corporate venturing (after the “bubble years”)
Maturity in most (traditional) sectors but also,
Emergence of new business models
CREATE OPPORTUNITIES FOR THE
VC & PE INVESTOR IN GREECE
Greece and the Regional Prospects
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Greek companies have been very active in the Region since
early ’90s (when few Western European dared to enter)
and still dominate FDI in some countries:
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accumulated FDI exceeds € 7 billion
biggest investor in Albania, FYROM and Serbia, #2 in Bulgaria
and #3 in Romania => created more than 200K new jobs
Various sectors; banking, telecoms, textiles, trade, retail etc.
Many Greek companies consider the Region as part of their
natural growth expansion business ground (thus securing
jobs in Greece)
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New markets with ever growing consumer needs with young
population and good education systems
Lower cost structure in order to remain competitive
Investing through Greece …
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Early investors in the region were caught in the rough
years: instability, financial crises, unregulated markets
The Region now is the most dynamically growing part
of Europe with lower risk profile:
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Bulgaria, Romania entering the EU soon
GDP growth 50% to 100% higher than Greece, 4x EU avg
Tamed inflation; macroeconomics in better shape; low
foreign debt
Simple and low tax environment (Bulgaria 15%, Romania
16%)
Greece can become the gateway to South Eastern
Europe and Turkey for international as well as for Greek
companies with:
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Large local market and
The Region a growth upside
… Private Equity and Venture Capital
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PE & VC Funds can provide the financing for companies
expanding abroad since there is:
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Limited liquidity in local Equity markets
Local capital is not abundant
Taking risks is part of their day-to-day business…
Thank you
George Kourtis
President, HVCA
Partner, Global Finance