Deals in Greece 2019 Increased deal activity in an improving investment environment PwC Greece February 2020 M&A activity in 2019 Greek companies attracted in total €12 bn in 2019, continued consolidation of the banking sector are of which €4.3 bn account for plain vanilla M&As, €5 expected to be the main drivers of sustainable growth bn were raised through traded corporate bonds, €1.2 2019 marked a bn through privatisationsand €1.5 bn concern non- In 2019, there was significant portfolio securitisation performing loans transactions by the Greek banks activity of non-performing loans by systemic banks, year of increased which were sold to international funds In 2019, 85 M&A deals were completed. The five largest M&A activity as the deals amounted to €1.7 bn. M&A landscape in 2019 is The reduction in non-performing loans, including characterisedby strong cross sectoral M&A activity, with securitisations and carve-outs, is estimated at €52.8 bn number of total deals no particular sector dominating in the Greek market by 2020 increased by 67% Inbound transactions represent roughly 50% of the total The top 20 M&A transactions completed in Europe transaction value, 6.3 pps higher than in 2018 in 2019 reached €235 bn in value, of which 45% compared to 2018 in Pharmaceuticals, 16% in Energy and 14% in Privatisation proceeds in 2019 were driven by the Telecommunications Media & Technology(TMT) extension of the concession agreement of Athens International Airport for 20 years, for a total consideration PwC is the first M&A financial advisor in Europe in terms of €1.1 bn of number of deals and second in terms of value in mid cap transactions between $10 mn - $300 mn In 2019, the trend of micro (<€10 mn) and small (€10 mn - €50 mn) transactions continued and was further In 2020, M&A deals along with privatisations are increased compared to 2018 expected to significantly exceed those of 2019 Key economic indicators, although gradually improving, remain weak and the level of investment is not sufficient to support high growth. Accelerating reforms and the Deals in Greece 2019 February 2020 2 1. Economic Outlook The challenge of the following years is the Contents achievement of a sustainable long term growth The level of M&A 2. M&A Transactions activity in Greece is 85 M&A transactions, amounted to €4.3 bn in 2019 versus €3.7 bn in 2018 still low compared to the rest of Europe 3. Bond Issues During 2019, 12 tradeable corporate bonds were issued, amounting to €5 bn 4. European M&A Highlights The top 20 announced deals in Europe reached €235 bn 5. M&A Dynamics for 2020 The M&A market will remain on a growth track in 2020 6. Conclusions 2019 was characterised by a large increase in the total number of transactions in all sectors of the Greek market 7. Appendices Deals in Greece 2019 February 2020 3 1. Economic outlook The challenge of the following years is the achievement of a sustainable long term growth February 2020 4 The total capital attracted by Greek companies in 2019 amounted to €12 bn M&A€4.3 bn €5 bn 85 Value of corporate bonds issued by Greek companies M&A TRANSACTIONS of above 33% acquisition amounted to €3.1 bn total value* €1.5 bn 64 NPLs Transactions MINORITY DEALS of deal value* €990 mn €1.2 bn 17 Privatisation proceeds DISPOSAL OF NON CORE ASSETS by systemic banks €236 mn Average€51 deal sizemn *total value 4of deals including non reported deals 6 Distressed deals were recorded in 2019 Deals in Greece 2019 1. Economic Outlook February 2020 5 Acceleration of reforms and consolidation of the banking sector will drive sustainable growth • Key economic drivers, although gradually improving, remain weak and the • In fiscal terms, Greece: investment level lies far below the levels that are consistent with high growth - has been realising budget surpluses (above target) from 2016 onwards, • Consumption continues to be restricted by disposable income, while bank - has been upgraded 3 times by international rating agencies since the beginning liquidity (deposits) remains 60% below of its pre capital-control levels; however, of 2019, with a view to reach an investment grade in the coming months, with clear signs of recovery, as the Greek economy gains in credibility and in a - raised €11.5 bn from the bond market, in 5 editions at a time lower risk environment - holds public debt with an average maturity of almost 21 years, 2.7 times longer • The reduction in the corporate tax rate from 28% to 24% (with plans to be than that of similar European countries; further reduced to 20% over the coming months), as well as the reduction of the dividend tax rate to 5% (from 10%) are expected to support the business and along with the SMP/ANFA repayment (of approximately €1.5 bn annually) environment and boost investment interest and the significant reduction in its debt servicing costs, it will be able to meet its needs in the near future • The State is in the process of reorganising and modernising its operational structures, but there is still a long way to go before it becomes sustainable and • As long as fixed capital investments remain below their depreciation level, efficient economic growth will remain limited • Greek banks are accelerating the process of removing NPEs from their balance • The country will benefit from major structural reforms as its economic model is not sheets; however, due to their structural and operating weaknesses, they face yet compatible with sustainable growth difficulties in funding growth • There are still some geopolitical risks, but they are not expected to reverse the • The real estate sector is showing signs of strong recovery, on the back of the country’s positive momentum reduction in the ENFIA tax by 22% on average, in 2019, with the investment in • The challenge of the following years is the achievement of a sustainable long term dwellings hovering around €1.5 bn in 2019. Tourism and rising demand for short- growth term rentals are expected to continue to support this trend Deals in Greece 2019 1. Economic Outlook February 2020 6 10y Government Bond Yields The “trust gap” between PIIGS 40% Greece and the rest PSI MARIO DRAGHI 35% “WHATEVER IT TAKES” of Europe has been 30% Referendum 25% Closure of first systematically shrinking Greece issues agreement 20% €3 bln of 5y bonds, first issue in 4 years 15% Trust gap 10% 5% The gap between the yield of the 0.84pps Portugal, Spain, Italy1.6% -3.5% Greece 1,4% Greek 10-year bond and the average 0 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 1/1/2020 yield of European countries similarly - 5 affected by the crisis stood at Greece Portugal Spain Italy Ireland Source: Reuters 0.84 pps 10 Year Bond Spread vs German bond at the end of 2019, from 2.68 pps in 2018 4.000 3.500 3.000 Greek Government Bond yields in 2019 approached those of other Eurozone’s periphery countries Basis points (bps) 2.500 The “trust gap” of the Greek economy stands at a historic low 2.000 with the difference in yields having dropped below 0.84 pps 1.500 Greek 10 year bond yields fell to their lowest levels since 2006, 1.000 marking a spread of 164 bps compared to the German bund. This reflects the recovery of market confidence towards the 500 Greek economy 0 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 1/1/2020 Source: Reuters Deals in Greece 2019 1. Economic Outlook February 2020 7 2. Privatisations and Mergers & Acquisitions 85 M&A transactions, amounted to €4.3 bn in 2019 versus €3.7 bn in 2018 February 2020 8 Privatisations in 2019 and forecasts for 2020 Year* 2019 2019 2019 2020e 2020e 2020e Extension of the Athens The sale of 100% stake in The sale of South Afandou The sale of a 100% stake The sale of a 30% stake The process regarding International Airport EESSTY S.A. to Trainose property in Rhodes for a of Hellinikon to Lamda in Athens International the sale of a 65% stake in concession for 20 years for for a consideration of €22 consideration of €15.2 mn Development is expected Airport is expected to be DEPA has started and it is a consideration of mn was completed in April was concluded in 2019 to be completed in 2020, completed in 2020.The estimated to conclude by €1.1 bn 2019 with the first instalment competition is entering the the end of the year standing at €300 mn phase of the submission of binding offers Privatisation *privatisation completion year Privatisation Proceeds 2447 (€ mn) 2060 In 2019 the privatization proceeds reached €1.2 bn mainly due to the completion of the AIA concession extension 1368 1205 New Proects* Total privatization proceeds from 2011 to 2019 1166 Hellinikon amounted to €6.9 bn of which €5.7 bn were collected 1040 998 Real Estate in five years (2011, 2013, 2017, 2018, 2019) proects & Marinas 498 394 261 300 5 87 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e *Refers to projects already or expected to be in competition phase in 2020: 30% sale of AIA, 65% of DEPA Commercial & DEPA Infrastructure, concession of Egnatia Motorway, regional ports and marinas, Kavala LNG deposits and other real estate projects Source: State Budget 2020 Deals in Greece 2019 2.