At the crossroads of Europe, Asia and Africa, Cyprus has a long history of working with foreigners. Over the millennia, Assyrians, Greeks, Phoenicians, Byzantines, Arabs, Turks and the British – just to name a few – have called the island home. This could be one reason why Cyprus is one of the region’s most adaptable economies – and a very strong professional and financial services hub.
Already, assets under management have tripled, from 2.1 billion euros in 2012, to 6.3 billion euros in the fourth quarter of 2018. Moreover, shifts in the global economy and European politics, have led the island-nation to diversify and promote new priority segments. One direction Cyprus is particularly heading towards is alternative investment funds. Legislation approved by the Cypriot Parliament in the summer of 2018, replaced the existing law, thus enabling – for the first time – the establishment of Registered Alternative Investment Funds (RAIFs).
With Brexit (more or less) underway, Cyprus is well positioned to benefit from this fractioning. For starters, it is one of just two EU member states with exports to the UK accounting for more than 10 percent of its total; and the UK is Cyprus’ second largest supplier of goods and services.
According to PricewaterhouseCoopers: “Cyprus could be the domicile of choice for UK fund managers reassessing their business models in light of Brexit. Cyprus can provide practical solutions to ensure they retain their access to the EU market, whilst at the same time enabling them to take advantage of significant tax breaks and benefits available to them.”
One particular investment bank looking to create win-win opportunities, not only for post-Brexit British financial players, but for large and small regional ventures as well – is AXIA. Not the largest Cypriot financial institution by any means, it is nevertheless a force to be reckoned with in the region.
Winner of EuroMoney’s 2018 ‘Best Investment Bank – Greece’, and Global Finance’s Cyprus country award, in the 2018 ‘World’s Best Investment Banks’ category, AXIA lives up to its name. In Greek, ‘axia’ means ‘value’; and perhaps it is the firm’s size that allows it to better understand the realities in the region in which it operates – namely, Cyprus, Greece, Portugal, and Italy – and adeptly provide the necessary tools and tailored solutions that investors appreciate.
“Our offering is sometimes considered at par, perhaps even better, than those of the global investment banks”, said Omiros Pissarides, COO and Group General Manager of AXIA. “It has to do with the fact that we are totally focused on countries like Cyprus, and also the other countries like Greece, Portugal, and Italy, where we do business in the Southern European region.”
An investment banking boutique, with a strong research and analysis team, AXIA caters mostly to western hedge funds, private equity funds, and sovereign wealth funds. Seeking opportunities in what Mr. Pissarides calls a “world of low returns”. Moreover, the bank is just as comfortable advising and customising solutions for multi-billion-euro investors, as it is helping smaller clients optimise their growth and business strategy.
Investment funds could well become a lead driver of investment into Cyprus, and steps taken by the Cyprus Investment Funds Association (CIFA) back in 2013, already helped secure the island’s placement on the map, as a leading global fund jurisdiction. According to Mr. Pissarides, between 2016 and 2018, the number of registered funds grew nearly 70 percent.
“The fact that legislation and the fiscal and economic realities favour Cyprus as a fund jurisdiction now, is something that we need to keep on working to sustain”, he added.
With regards to the new AIF legislation, Mr. Pissarides admits that Cyprus is still a rather small jurisdiction for funds, though many short-term economic benefits exist for banks such as AXIA. Looking further ahead, he said, “Being locally based, and having access to investment opportunities locally, which we are seeing in Cyprus as well, is likely to give an additional incentive to funds that are based locally to actually make inward investments into Cyprus, which otherwise they would not have known, had they been based in any other jurisdiction abroad.”
AXIA’s local expertise is also coming in handy, when it comes to Cyprus’ non-performing exposures and non-performing loans. Both still higher than the EU average, for many, these represent investment opportunities. Certainly, for local banks with their finger firmly on the pulse, NPEs and NPLs afford them the opportunity to hone and show off their advisory skills.
“We focus on large capital transactions, and I would say that we have advised inward transactions of capital extending well into a few billion euros, within 2018. Which is a testament of our ability to understand the local markets, and advise the global institutional capital providers of how they should approach our region, and companies and industries within the region that we cover”, explained AXIA’s COO.
In terms of its geographical growth plans, AXIA is strongly focused on Italy and Portugal, the former being the most recent country addition. The bank remains committed to using domestic resources and teams, thereby reinforcing its local approach and expertise.