Deals in Greece 2016 Disposal of non-core assets by systemic banks January 2017 PwC M&A activity in 2016 In 2016, 38 M&A deals of €4.4bn total Greek companies in 2016 attracted The top 20 M&As completed in value were completed, almost triple in total €4.4bn, of which 75% Europe in 2016 reached €293bn in compared to 2015, of which the five referred to sales of non-core assets value, of which 36% in largest reached €3.8bn by the systemic banks, €1.6bn telecommunications, media and through international and traded technology, 22% in industry and 17% The economic uncertainty persisted in corporate bonds in financial services sectors 2016 with the privatization program delayed and the second assessment Privatization revenues recorded a PwC, was the leading global M&A not completed as expected small rise during 2016, reaching financial advisor in terms of deal €500mn volume and the third M&A financial From the M&As that have been advisor in Europe, in terms of deal estimated to close in 2016, the The M&A market in Greece is very value in mid cap transactions concession of 14 regional airports and shallow and the exit from the (<$250mn) the acquisition of the glass production recession is not yet visible. The small activity of Frigoglass SAIC from the transaction sizes and the very few GZ Industries were not completed international deals give the tone Apart from the liquidation of non-core assets of the systemic banks, 2016 was one more year of very low M&A activity Deals 2016 in Greece January 2017 PwC 2 Executive summary 39% 38 Domestic No of M&A transactions 58% Inbound M&A 3% €4.4 deal Outbound bn value Direction of transactions* Financial Services 152% lead the M&A Increase of average market deal size from 2015 70% January 2017 Deals 2016 in Greece *in terms of number of deals PwC 3 Content overview Economic M&A Transactions 1 outlook 2 38 M&A transactions, Signs of stabiliazitation mainly sale of non- with weak economic core assets by the The level of drivers banks, amounted to €4.4bn in 2016 M&A activity Bond Issues European M&A 3 During 2016, nine 4 Highlights in Greece is tradeable corporate bonds Top 20 announced were issued amounting to deals in Europe very small € 1.6bn reached € 293bn compared to M&A Dynamics for Conclusions the rest of 5 2017 6 2016 was a better year The value of M&As in for M&As than 2015, 2017 is not expected to mainly due to the Europe exceed the 2016 levels disinvestments from the systemic banks 7 Appendices Deals 2016 in Greece January 2017 PwC 4 Economic Outlook The Greek economy after seven consecutive in recession years is showing signs of stabilization Deals 2016 in Greece January 2017 PwC 5 Partially stabilized in 2016 the Greek economy in terms of GDP • The key economic drivers of growth remain weak • Consumption appears to have stabilized while disposable income is under heavy pressure from taxes • Investments stabilized at about € 20bn. p.a., along with saving/credit flows of private sector • The structural weakness of the State persisted in 2016 • The completion of the ongoing assessment has been delayed • If the assessment is not complete by the estimated time of completion, there will be a severe state funding gap • Should the IMF eventually decline to join the program, a new program will have to be agreed with the European States to cover the gap to have been funded by IMF • The likelihood of significant growth for 2017 is low January 2017 DealsPwC2016 in Greece 6 PwC Privatizations in 2016 and 2017 estimates * 2016 2016 2017 2017e 2017e 2017e Year The sale of the 51% In October 2016, the The sale of 100% The privatization of The process for the Expected within stake of OLP to deal between Apollo stake in TRAINOSE 14 regional airports exploitation of 2107, the completion COSCO for a Investments (100% to the italian Ferrovie to the Fraport AG – Hellinikon is moving of the sale of 24% of consideration of € subsidiary of Jeremyn Dello Stato Italiane SLENTEL ahead and within 2017 ADMIE to the 281mn has been Street Real Estate Fund) S.p.A. has been consortium (€2.2bn) the first payment of Chinese State Grid completed to acquire Astir Palace completed in 2017 has been signed and €300mn, is expected for €320 mn SA from National Bank for a consideration of an upfront fee of € out of a total of Greece for a € 45mn 1.2bn are expected in consideration of consideration of 2017 €915mn Privatization €393mn was completed Sector *Privatization completion year Forecasts Privatization Proceeds 1.732 In 2016 the privatization proceeds € mn Other reached €500 mn*, against € 1.3bn estimate (according t0 the first review of 1.166 the 3rd Economic Adjustment Programme 1.040 of June 2016) Total privatization proceeds from 2011 to 500* TrainOSE 394 2016 amounted to € 3.4bn, of which €2.2 261 Hellinikon 5 bn were collected in only two years (2011 Regional Airports and 2013) 2011 2012 2013 2014 2015 2016 2017f Source: State Budget 2017 *OLP, Astir, digital share, radio signal rights, Kassiopi, sale of Deals 2016 in Greece specific real estate properties January 2017 PwC 7 The “trust gap” between the 10y Government Bond Yields country and the rest of Europe is PIIGS 35 still large after the imposition of PSI MARIO DRAGHI “WHATEVER IT 30% TAKES” Referendum capital controls 25% Trust gap Closure of 20% Greece issues €3bln. of first The “trust gap” has been 5y bonds, first issue in 4 agreement years 15% stabilized since May Greece 6.6% 2016, signifying the 10% presence of political 5% Portugal 3.5% 6.3 Ireland, Spain, Italy 0,8% - 1,9% uncertainty 0% 1/1/2012 1/7/2012 1/1/2013 1/7/2013 1/1/2014 1/7/2014 1/1/2015 1/7/2015 1/1/2016 1/7/2016 1/1/2017 Portugal Italy Greece Ireland Spain 6.3 pps Source: Bloomberg Economic Sentiment Indicator Greek Government Bond The deteriorating economic 110 yields keep outperforming sentiment, which is about those of other Eurozone’s 16pps lower than in Eurozone 100 16% periphery countries in 2016 countries, reflects the fragile economic environment in 90 Since July 2015, when the 2016 “trust gap” of the Greek Economic 80 sentiment deficit economy rocketed to 18pps the period prior to the Greek EU 28 70 Eurozone countries referendum, the difference of Greece yields has not fallen below 60 6pps Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Source: Eurostat Deals 2016 in Greece January 2017 PwC 8 The investment gap hinders economic growth 30% Even though investments rose during 2016 the investment ~ €100 bn Investment Gap activity remained below levels 20% required to support substantial and sustainable economic growth 10% For 2016, the total investment in Greece amounted to 12.4% of GDP, c.7.1pps (or about € 13bn 0% p.a.) lower than the average 2000- 2008 2000 2002 2004 2006 2008 2010 2012 2014 2016e Investment % GDP avg EU28 Investment % GDP Greece Greek GDP Growth % Source: IMFWEO (October2016) 20% -62% Investment in The collapse of the construction -76% Construction and industry by 76% between 2007 15% Industry and 2014, along with the shrinkage of the investment rate in the 10% industry by 62%, explains largely the investment gap in the economy 5% 0% 2000 2002 2004 2006 2008 2010 2012 2014 2016e Investment in Construction (%GDP) Investment in machinery and equipment (%GDP) Source: EL.STAT. Deals 2016 in Greece January 2017 PwC 9 M&A transactions in 2016 Greek corporates attracted in total € 4.4bn in 2016 M&A deals* Greece 2016 M&A transactions increased in Minority holdings account 2.0% 0.9% Leisure number in 2016 reaching 38 for just €139 mn. of which Industry 2.4% 0.2% 31% coming from Financial F&B Pharma The total deal value increased Services and 29% from the 1.2% significantly by 230% compared Services sectors 11.1% Retail to 2015, mainly due to the Real Estate disposal of non core assets by the During 2016, the issuance of 4.5% systemic banks, while the average international trade Services 7.1% deal size increased by 152% bonds raised € 1.6bn € 4.4 bn Shipping Transactions in Financial 0.3% services drove deals in Greece 70.3% ΤΜΤ** Financial Services (c.~ 70%) in 2016 * Including minority holdings ** Telecommunications, Media and Technology Deals 2016 in Greece January 2017 PwC 10 Top 5 M&A deals in 2016 Bidder Target Deal Amount The top 5 M&A (€ mn) deals account 1 Qatar National bank (QNB Group) Finansbank A.S. (99.8%) 2,750.0 Apollo Investments (100% subsidiary of for 2 Astir Palace Hotel SA (90.2%) 393.2 Jeremyn Street Real Estate Fund) Goldman Sachs Asset Management, L.P. 3 and Deutsche Alternative Asset NBGI (limited partnerships ”the Funds”) 288.0 Management (Global) Ltd 86% 4 Cosco Shipping Lines CO. (Cosco) Piraeus Port Authority SA(51.0%) 280.5 5 ERGO International A.G ATE Insurance S.A (Piraeus Bank) (100%) 90.1 Total deal Value 3,801.8 of total deal value Deals 2016 in Greece January 2017 PwC 11 M&A Increased activity and larger average deal transactions rose size in 2016 by Transaction activity The number and the value of € 211 m announced deals in 2016 is € 116 m the highest since 2008. The Average size of transactions €67 m 31% value of deals has almost € 46 m tripled compared to 2015, mainly due to the liquidation € 133 m of non-core assets by the € 201 m systematic banks in 2016, with the €326 m € 99 m € 202 m average deal size There have been growing by four transactions which exceeded € 150mn in 2016 152% Transaction size distribution 24 During the period 2008- 21 2016, 208 transactions were 20 2016 2015 recorded with total deal value 16 14 11 compared to 12 standing at € 29bn 9 2015, reaching 8 4 4 4 2 2 the highest levels