Deals in Greece 2017 One more year of low investment activity mainly driven by the disposal of non-core assets by the systemic banks February 2018 PwC M&A activity in 2017 • Greek companies attracted in total • Economic growth in 2017 was anaemic • The very few international deals give the € 5.5bn in 2017 , of which € 1.9bn were at less than 1.5%, with constrained tone that Greek assets are still not that raised through traded corporate bonds, liquidity and low investment activity attractive despite the asset value collapse € 1.6bn account for plain vanilla M&As, of the last 7 years just € 250mn for Share Capital Increases • Privatisation proceeds in 2017 were covered by strategic investors and driven by the 14 regional airports and • The top 20 M&As completed in Europe € 1.7bn through privatisation proceeds Trainose, reaching € 1.7bn in 2017 reached € 234 bn in value, of which 37% in Pharmaceuticals, 14% in • In 2017, 36 M&A deals of total value • The M&A market in Greece remained Retail and 8% in Manufacturing € 1.6bn were completed. The five largest very shallow, but as we are entering a deals amounted to € 1.2bn and period of growth, domestic • PwC is the leading global M&A financial represented divestments by the systemic transactions led by sectoral advisor in terms of number of M&A banks. Disposal of non core assets by the consolidators may be on the go deals, and the fourth M&A financial banks is the main phenomenon of the advisor in Europe in terms of deal value last few years, accounting for 75% in • In 2017 there was a shift from mid (in mid cap transactions (<$ 250mn)) 2016 and 49% in 2017 in terms of deal small transactions (€ 10mn- € 50mn) value to micro deals with values below € 10mn • If we exclude last years’ Finansbank sizeable deal (€ 2.8bn), the number of M&A deals as well as their total value, were almost stable (€ 1.6bn in 2016) while the average transaction value of M&As, excluding Finansbank, remained almost stable at € 45mn Apart from the sale of non-core assets by the systemic banks, 2017 was another year of low M&A activity Deals in Greece 2017 February 2018 PwC 2 Contents Economic M&A Transactions 1 Outlook 2 36 M&A transactions, The Greek economy is mainly sale of non- entering a period of core assets by the The level of anaemic growth banks, amounted to only €1.6 bn in 2017 M&A activity versus €4.4bn in 2016 Bond Issues European M&A in Greece is 3 4 Highlights During 2017, nine tradeable corporate bonds The top 20 announced low were issued, amounting deals in Europe to € 1.9bn reached € 234bn compared to M&A Dynamics for Conclusions the rest of 5 2018 6 M&As in Greece are The value of M&As in dominated by the Europe 2018 is expected to disposal from the exceed the 2017 levels Greek systemic banks, with no other real 7 Appendices Deals in Greece 2017 February 2018 PwC 3 The total capital attracted by the Greek companies in 2017 amounted to € 5.5bn € 0.25 € 1.6 bn Share Capital Increases 36 M&A bn with strategic investors Value of M&A TRANSACTIONS of above corporate 33% acquisition amounted to € 1.9 27 bonds issued € 422mn total value* by Greek bn companies 4 MINORITY DEALS of deal value* € 400mn Privatisation proceeds in 2017 5 DISPOSAL OF NON CORE ASSETS € 1.7 by systemic banks € 794mn bn *total value of deals including non reported deals 8 Distressed deals were recorded in 2017, mainly in the media sector Εξαγορές και Συγχωνεύσεις Επιχειρήσεων στην Ελλάδα 2017 Φεβρουάριος 2018 PwC 4 Anaemic growth in 2017 and possibly for 2018 • The key economic drivers remain weak • Consumption and disposable income are still under high tax pressure • Investments are hovering at about €20bn p.a. and savings are at best stagnant • Liquidity across the economy is constrained by capital controls • The structural weaknesses of the State, fiscal and operational, persist despite fiscal surpluses • A timely completion of the 3rd Programme assessment and of the agreement on exit is necessary for achieving a positive momentum for the next years • Greece can only close the 3rd Economic Adjustment Programme through an Exit Agreement with stipulations on debt restructuring, contingent funding, reform commitments and monitoring • Debt rescheduling and relief, along with sustainable economic growth can cope with the national debt burden • Fiscal targeting for the post programme period has already been agreed through the medium term fiscal strategy • The NPE/NPL situation of the banks and the results of the forthcoming stress tests may have an impact on the Exit Agreement • Economic growth in 2017 and 2018 will remain anaemic at below 1.5% and 2% correspondingly and only marginally influenced by political events • The proportional representation stipulated in the electoral law to come in force, may have an adverse impact on medium term growth • Orderly exit from the Programme and political stability are key factors for growth, which will remain anaemic unless investments start accelerating February 2018 PwC 6 PwC The “trust gap” between Greece 10y Government Bond Yields and the rest of Europe has been PIIGS 35 systematically shrinking PSI MARIO DRAGHI “WHATEVER IT 30% TAKES” Referendum 25% Greece issues €3bln. of Trust gap 20% 5y bonds, first issue in 4 years Closure of first The “trust gap” 15% agreement Greece 4.1% has been 10% 2.8pps 5% stabilised since Portugal, Spain, Italy 1.6% - 2.0% 0% 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 May 2016 Portugal Italy Greece Spain Ireland 2.8 pps Source: Bloomberg 10 Year Bond Spread vs German bond 3,500 Greek Government Bond Greek 10 year bond yields yields kept outperforming fell to lowest levels since 3,000 those of other Eurozone’s 2006, marking a spread of 2,500 periphery countries in 2017 365 bps with the German Basis Basis points (bps) bund. This reflects the 2,000 Since July 2015, when the prospects of growth for 1,500 “trust gap” of the Greek Greece and the certainty of 1,000 economy rocketed to 18pps, exiting the current the difference of yields has not programme 500 fallen below 2.5pps 0 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 Source: Bloomberg Deals in Greece 2017 February 2018 PwC 6 Privatisations and Mergers & Aquisitions PwC Privatisations in 2017 and forecasts for 2018 * 2017 2017 2018e 2018e 2018e 2018e Year The privatisation of The sale of 100% stake The sale of the 67% The Hellinikon Expected within 2018 The extension of the 14 regional airports in TRAINOSE to the stake of OLΤΗ to the project is expected to the completion of the Athens International to the Fraport AG – Italian Ferrovie Dello DIEP GmbH - start, as the sale of 66% stake in Airport concession SLENTEL Stato Italiane S.p.A. has Belterra Investments development plan of Hellenic Gas could be completed in consortium has been completed in 2017 Ltd - Terminal Link € 8 bn from Lamda, Transmission System 2018, if European been signed and for a consideration of SAS consortium for a has been submitted Operator (DESFA), as Commission €1.2bn was paid in € 45mn consideration of in July of 2017 and the final offers have approvals are 2017 €232mn will be approvals have been been submitted secured. The final completed obtained stake (5%) holdings privatisation in OTE will be sold in 2018 Sector *privatisation completion year Forecasts Privatisation Proceeds 2,736 • In 2017 the privatisation proceeds € mn OTE reached €1.7bn, against € 1.9bn DEPA estimate according t0 the State 1,657 Helliniko Budget of 2017 Athens 1,166 • Total privatisation proceeds from 1,040 International Airport 2011 to 2017 amounted to € 5bn, of 500 394 HELPE which €4bn were collected in three 261 5 years (2011 and 2013 and 2017) Other* 2011 2012 2013 2014 2015 2016 2017 2018f Source: State Budget 2018 *Includes: OLTH, DESFA, EYDAP, DEH, EYATH, Deals in Greece 2017 February 2018 PwC 8 M&A transactions in 2017 M&A deals* Greece 2017 Deal value M&A transactions were almost Minority holdings deals 6.5% stable in number in 2017 reaching 36, amounted to €400 mn., of 0.9% Industry while the total deal value was which 83% account for Energy Food & Beverage 0.3% almost flat compared to 2016, and 17% for Real Estate 4.9% Pharmaceuticals excluding Finansbank deal which sectors Health 4.6% inflated last year total deal value Real Estate Minority Holdings 2017 0.3% Transactions in Financial Services Retail Deal Value 3.0% (mainly due to the disposal non-core Services assets) drove deals in Greece in 2017 83.4% 6.6% 1.9% accounting for 47% of the total deal Energy € 1.6bn TMT* Shipping value 16.6% Share capital increases in the Real16.6% €400 mn Real 23.7% Athens Stock Exchange covered by EstateEstate 47.2% Energy Financial strategic investors amounted to just Servicesa €251 mn 80.0% Energy * Including minority holdings *ΤΜΤ: Telecommunications, Media and Technology Deals in Greece 2017 February 2018 PwC 9 Top 5 M&A deals in 2017 amount to € 1.2bn, driven mainly by Financial Services Bidder Seller Company Target Deal Amount The top 5 M&A (€ mn) deals account for 1 KBC Group NV National Bank of Greece United Bulgarian Bank (99.91%) 610.0 State Grid International 24 % stake in Independent Power 2 Development Limited Public Power Corporation Transmission Operator S.A.