Professional Investor: Greece is the word among London equities
Saturday 12 July 2008
With worldwide attention switching from Silverstone and Wimbledon to Beijing, many investors have been experiencing the yin-yang of equity, property and bond markets – and they must wonder if they would not be better off stuffing all their savings under the mattress.
However, experience shows that these times of financial crises can often be an excellent opportunity to make good long-term investments. Rather than blindly following the herd and focusing on China, one area we believe is increasingly attractive is an Olympic host nation rather closer to home.
"Greece is a country boasting a long history, brilliant civilisation and beautiful sea and landscapes," said Dimitris Avramopoulos, the Greek tourism minister, in an interview with a group of Chinese journalists in early 2006. However, many UK investors may not be aware there is a growing number of well-managed Greek companies that have their primary listings on the London Stock Exchange. This means these Greek companies are classified as UK equities – just as the easyJet founder Stelios Haji-Ioannou was knighted for services to entrepreneurship, in spite of being a non-resident of the UK.
This may seem rather bizarre, but it is simply a reflection of the opening up of global capital markets over the past few years. Greek and other overseas companies are simply looking to gain increased marketability and liquidity for their shares and, in contrast to the US, London's "light touch" approach to regulation is viewed by many as an attractive environment in which to conduct business.
This is not to say that these Greek companies listed in London are just a flash in the pan. An interesting example is Goldenport Holdings – a container and dry-bulk Greek shipping company that listed on the main UK equity market in April 2006, but was founded nearly 30 years ago by Captain Paris Dragnis, the current chief executive, who still owns nearly 60 per cent of the company.
As Erling Naess, the Norwegian ship owner and businessman, once said: "God must have been a ship-owner. He placed the raw materials far from where they are needed and covered two-thirds of the Earth with water."
Goldenport, with its diversified fleet of 22 operational container ships and dry-bulk vessels, is benefiting from the ongoing demand for commodities around the world. But, in contrast to many of its peers who depend heavily on the spot charter market, it has established long-term contracts with key blue-chip customers. This means that its visibility of profits and cash flows is very strong, providing investors with a high and growing dividend stream when several other UK companies are reducing their dividends payable to shareholders.
Another interesting company is Dolphin Capital Investors, set up by Miltos Kambourides, an MIT graduate who learnt his trade at Goldman Sachs and working for George Soros. He and his team are in the process of developing a number of high-end residential holiday resorts in Greece, Cyprus and Turkey in conjunction with leading luxury hotel chains such as Aman and Four Seasons.
Their main focus is on identifying, purchasing and obtaining the initial planning permission for appropriate sites. They then project-manage the development phase, with the reward being huge uplifts in land valuations and significant capital appreciation for shareholders.
Not all Greek companies listed in London are in the traditional industries of shipping and tourism. Velti is a technology company that has developed software platforms to facilitate marketing over mobile telephones. The company, founded by another MIT graduate, Alexandros Moukas, recently received a significant boost when Interpublic, the third-largest advertising agency globally, selected it from 40 contenders to form a joint venture to develop their clients' interests in mobile marketing. Velti recently announced first-half revenues 100 per cent up on the same period last year.
According to a survey conducted in China in 2005, Greece was voted the Chinese people's most popular choice as a tourist destination. As Avramopoulos also noted: "We are trying to make sure they feel at home in Greece."
With the outlook for the domestic economy deteriorating, UK equity investors should be glad that Greek companies are happy to feel at home in London. Without them, UK investors would be much worse off.
Michael Crawford is the manager of the Credit Suisse Alpha Income and Alpha Growth Funds. Sean O'Grady is away
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