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John Paulson to Participate in Piraeus Capital Increase

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Jan-Henrik Förster and Sotiris Nikas
·2-min read
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(Bloomberg) -- John Paulson is among investors planning to participate in a capital increase by Piraeus Bank aimed at helping the Greek lender to clean up its balance sheet and allow the government to reduce its stake.

The billionaire investor, already one of the biggest private shareholders in Greece’s second-largest bank, will take up a significant stake alongside two other anchor investors, in a share sale that could raise as much as 1.38 billion euros ($1.66 billion), Piraeus said in a prospectus for the increase.

Paulson & Co., Helikon Investment Ltd. and Aristotelis Mistakidis have agreed to acquire the stakes as cornerstone investors. After the capital increase, Paulson could hold as much as 18.6% of the bank instead of the 4.6% stake that he currently owns.

The move is part of a broader clean-up effort by Piraeus that also includes bringing its bad-loan ratio below 3% over the medium term, from 45% last year, and a plan to sell new debt by the end of the year. Greek banks are trying to offload their large stock of non-performing loans, a result of the country’s decade-long debt crisis that cost about a quarter of its economic output.

The bulk of the new shares sold by Piraeus -- about 85% -- is expected to go to international investors in a private placement, Bloomberg has reported. Depending on the amount that Piraeus will raise in the coming days, Greece’s bank recapitalization fund is expected to see its 61% stake cut roughly in half, people familiar with the matter said.

Paulson made most of his wealth during the housing crash in the U.S. more than a decade ago when he bet against subprime debt. He started investing in Greek banks in the wake of the country’s debt crisis. Last year, he decided to hand back money to outside investors and convert his firm into a family office overseeing his wealth.

The global coordinators for Piraeus’s capital increase are Goldman Sachs Group Inc. and UBS Group AG. Morgan Stanley advises the Hellenic Financial Stability Fund.

(Adds confirmation from Piraeus Bank in second paragraph)

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