By Hamza Hendawi
NICOS Shacolas said yesterday the drawn-out negotiations to sell his insurance business had made progress. The announcement sent share prices surging by nearly one per cent on a volume of £3.33 million, one of the biggest so far this year.
In a single-paragraph letter sent to the Cyprus Stock Exchange Committee and made available to the media and brokers, the Cypriot tycoon said: “In reference to the letter sent today, I wish to inform you that the negotiations referred to in previous announcements are continuing more intensively and that definite progress has been made.”
Traders said the Shacolas’ letter was in response to one sent to him earlier yesterday by the bourse’s authority seeking an update on the progress of the negotiations. The Shacolas letter did not name the party with whom he was negotiating the sale of his Paneuropean Insurance Group, but previous announcements mentioned the Interamerican Insurance (Greece) group as the main contender.
News that negotiations were taking place to sell Paneuropean and its affiliate companies Interamerican Insurance and Philiki Insurance first surfaced nearly two months ago, luring hundreds of investors to buy in the three titles in the hope of cashing in when the sale goes through.
But negotiations have since dragged on, with little information about their progress, creating the impression that they may have foundered. The three titles then began rapidly to come off their record highs and trade in them was greatly reduced.
“The lack of news did create a certain level of uncertainty and a big down- side for those who moved in at a higher level in the Shacolas insurance titles,” said Stavros Agrotis, a senior broker at CISCO, the Bank of Cyprus’ brokerage and investment banking arm.
Yesterday’s letter from Shacolas, however, appeared to provide the lift that the market needed. The official all-share index leapt by 0.99 per cent to close at 90.59, recording its third successive session to end in positive territory.
The insurance sub-index alone rose by 2.69 per cent to close at 68.41 points on a volume of £1.27 million, ahead of the consistently heavily traded blue-chips of the banking sector.
The banks sector had a volume of £1.08 million and its sub-index closed 0.94 per cent up at 104.65.
Paneuropean shares rose by two cents to close at £1.21, while Interamerican closed up six cents at £1.10 and Philiki up seven cents to reach £1.03. Volume in the three titles accounted for nearly 35 per cent of yesterday’s trade, suggesting that interest had rekindled in the stocks.
Traders said Shacolas’ asking price for his and his family’s stake at Paneuropean was £1.40-£1.45 apiece, a level that if agreed would allow investors in the three titles to walk away with handsome profits.
But the benefits of a deal were expected to reach far beyond the three stocks.
“Those who took positions in the Shacolas titles will be made a public offer for their holdings which will entice them to sell and cash in,” said Yiannos Andronikou of Suphire Stockbrokers Ltd.
“Those who had not been able to take positions in the titles have done so in other stocks and are now waiting for the Shacolas investors to cash in and put their money in those stocks.”
“In short, the whole market will receive a boost if a deal is reached,” he said.
The rally in the Shacolas’ insurance titles began on Friday, when a rumour later denied by the Group said a deal had been struck for the sale of Paneuropean. Insurance shares nevertheless jumped by 3.7 per cent on more than £500,000 worth of trade on Friday.
“Today’s rally was not exclusively due to the Shacolas letter,” said CISCO’s Agrotis. “We, as CISCO, were net buyers in other titles, including other Shacolas’ stocks.”
Of the market’s seven sub-indices, only tourism and miscellaneous closed down. In second place after the insurance sector’s 2.69 per cent rise came trading companies. Its sub-index leapt 2.51 per cent with Shacolas’ CTC rising by 5.5 cents to close at £1.02 apiece.
