A Greece-focused hedge fund has been launched by Dromeus Capital Group, an emerging markets alternative investment specialist based in Geneva and Athens, that is thought to be one of the first funds to focus specifically on a recovery in Greek assets.
The fund will target opportunities created by the sell-off in Greek assets since the start of the financial crisis. The Greek stock market has dropped by 83%, while the country’s real GDP has contracted by 20% since 2008.
Dromeus says that the size of the fund will be limited to €200 million until there are substantial improvements in the liquidity of the Greek debt and equity markets.
A statement from the firm said the launch of the fund marks a major change from Dromeus’ previous negative stance towards Greek assets – with the firm first warning investors of the impending problems of Greece’s debt in the aftermath of the financial crisis in 2008.
Achilles Risvas, CEO and managing partner of Dromeus Capital Group, commented: “The huge uncertainty and political instability has caused investors to sell down Greek assets to prices from which the likelihood of further declines is limited.”
He added: “This is the ideal environment for deep-value investors. Prices of stocks and bonds are cheap both versus historical norms and relative to comparable Eurozone assets. The market is priced for the worst case scenario of a Greek exit from the Euro and even more extreme distress to the Greek economy.”
However, Risvas explains that the fund will be investing on the basis that a revaluation in Greek assets is likely to be a protracted process – with more periods of extreme volatility ahead.
He said: “We will only gradually accumulate select investments that meet our fund’s strict liquidity criteria. Although the entire market is oversold, investment selection is the key to outperformance. We are looking for bargains and we will avoid overpriced securities.”
The firm said that initial investors in the Dromeus Greek Advantage Fund include funds of funds, private banks, asset managers and family offices. It says the fund will use futures to lower the volatility of the portfolio and will not use leverage.