Greece: Back in the game

Privatisation work is trickling back into Greece and foreign investor interest is resurfacing


Speaking to Greek lawyers in a week when several UK firms announced redundancies and restructurings is an interesting experience. Despite the fact their jurisdiction has and continues to suffer more from the financial crisis than other European countries, Greek corporate law firms have taken the approach of tightening their belts rather than firing staff.

Nevertheless, lawyers do not hide the fact that life is tough in Greece.

“The legal market is suffering a lot due to the fact that clients, especially Greek clients, have difficulty paying on time,” observes M&P Bernitsas managing partner Panayiotis Bernitsas.

“Clients are demanding that you either cut your fee or offer a capped fee,” agrees KGDI senior partner Leonidas Georgopoulos.

Fee pressure has become a serious problem for law firms; all have found themselves cutting costs in the past couple of years. All those interviewed for this feature assert they have managed to avoid making redundancies while adding that smaller firms involved in day-to-day Greek domestic work are worst affected.

Georgopoulos says the cuts in 2011, “the worst year”, helped KGDI improve its results in 2012.

“We can’t complain. We’re doing quite well, considering the world situation,” he says.

Privatisation enterprise

The main piece of ongoing work for corporate and commercial firms is the extensive privatisation programme being run by the Greek state as part of its commitment to the EU, International Monetary Fund and European Central Bank troika that bailed the country out in 2010.

“Privatisations are slowly coming through,” says Karatzas & Partners managing partner Catherine Karatzas, explaining that one reason for the delay was last year’s elections. “Investor interest and asset valuations are lower. It will be good for the economy when these privatisations are finally realised.”

Some deals have completed, such as the sale of the state lotteries licence. Karatzas & Partners advised on the privatisation, which finished in December, alongside Bahas Gramatidis & Partners and Allen & Overy.

Others, such as the sale of the Athens International Airport site, are proceeding slowly. The bidding and tender process has attracted criticism.

“Despite the fact they say they take into account the quality and experience of firms, most of the time the government and state companies engage the cheapest ones,” says Bernitsas.

He says that for this reason M&P Bernitsas is positioning itself strategically to be on the buy-side in the privatisation process.

Money back

There is also some movement in other areas of the Greek economy, such as banking. The National Bank is undertaking a share-swap offer for rival Eurobank, while French bank Société Générale sold its Greek subsidiary Geniki to Piraeus Bank last October.

And lawyers report signs of renewed interest from private equity funds. Karatzas says she has been visited by funds she has not seen for years, adding that investors from London are beginning to explore Greek opportunities again.

“Some are looking for opportunities in distressed assets, some of them are looking at healthy Greek companies whose valuations have gone down,” she says.

Bernitsas also says there has been a pick-up in interest from private equity, although few deals have actually been done. He believes that, while concern over Greece’s membership of the eurozone has passed, considerable uncertainty remains, which is putting investors off.

“There’s also a misconception that prices are going to go down by a huge percentage and this isn’t the case,” he adds. “There’s a drop in values, but not as substantial as perhaps the equity funds would have expected.”

“We know there are private equity funds interested in coming to Greece, but so far nothing has happened,” agrees Georgopoulos.

Government reforms such as changes to the tax system and streamlining the process of foreign investment will make a difference in the longer term, say lawyers although, as Georgopoulos observes, “bureaucracy can’t be abolished overnight”.

Despite the fact that many obstacles still stand in the way of full recovery, lawyers are more positive about the future than they have been for a while.

“The outlook for Greece and Greek investment is changing – there will be stops and starts but things are looking much more positive in 2013,” concludes Bernitsas.

Key figures: Greece

GDP ( 2011): €206.4bn

Inflation (Dec 2012): 0.8%

Population (2011): 10.9m

Life expectancy at birth: 80

Unemployment rate (Q3 2012): 24.8%

Source: World Bank, National Statistical Service of Greece

In brief

Times are still tough for lawyers in Greece, but judicious cost-cutting and the state’s privatisation process have helped some of the bigger firms to an improvement in outlook over the past year.