Paulson, BlackRock to Back Capital Hike for Greece’s Alpha

© Bloomberg. BlackRock headquarters in New York, U.S Photographer: Jeenah Moon/Bloomberg

(Bloomberg) -- Billionaire John Paulson, Schroders (LON:SDR) Plc and BlackRock Inc (NYSE:BLK). are among the investors planning to participate in an 800 million-euro ($955 million) capital increase by Greek lender Alpha Bank set to run next week, people familiar with the matter said.

The investors are betting the fresh capital will help Alpha strengthen its balance sheet and play a key role in funneling money from the European Union’s recovery program to borrowers. Greece is set to get 7.5 billion euros this year, out of a total 30.5 billion euros alloted through 2026, to support an economy decimated by the decade-long debt crisis and more recently the pandemic.

The Hellenic Financial Stability Fund, Greece’s bank recapitalization fund and Alpha’s largest overall shareholder, will support the plan and its decisions will be announced at the appropriate time, a spokeswoman for the fund said.

“Shareholders voted in favor of the capital increase and we will be participating,” a spokesperson for the investment firm Paulson & Co. said in an email to Bloomberg.

Under the plan, existing shareholders will receive a priority allocation and the per share has been set at a maximum of 1.2 euros. New shares will be offered in Greece via a public offer and outside the country through a private placement book-building process.

A spokesman for Alpha Bank declined to comment. A spokeswoman for Schroders also declined to comment, while a representative for BlackRock wasn’t immediately available for comment.

Alpha, the country’s third-largest lender, is targeting 10 billion euros in total new loans through 2026, when the EU plan, known as the Recovery and Resilience Facility, is scheduled to conclude. The bank calculates that the RRF will allow Greek lenders to double lending growth by the end of 2024.

The lender is also aiming to accelerate the reduction of its bad loans in an effort to bring its NPE ratio to 7% by end-2022, with plans to further reduce the figure to 2% by the end of 2024.

The book-building process will be run by a syndicate of international investment banks led by Goldman Sachs Group Inc (NYSE:GS). and JPMorgan Chase & Co. (NYSE:JPM), with Citigroup Inc (NYSE:C). acting as senior joint bookrunner and Barclays (LON:BARC) Plc and AXIA Ventures joint bookrunners.

(Updates with comments from HFSF and Paulson spokespeople from fourth paragraph.)

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