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Canadian funds bid big for Eurobank shares

Greece's bank bailout fund has received bids from anchor investors, including Canada's Fairfax and York Capital, for a big chunk of Eurobank's 2.86 billion euro ($3.95 billion)share offering.

Eurobank, Greece's third-largest lender and 95 percent owned by the Hellenic Financial Stability Fund (HFSF), is carrying out a share offering to plug a capital shortfall revealed last month in a stress test conducted by the country's central bank.

"The bids from the cornerstone investors fall within the 1.2 to 1.5 billion euro range, targeted by the HFSF bailout fund," one of the bankers told Reuters.

Eurobank, with a market value of 2.19 billion euros, will be the third Greek lender after peers Alpha and Piraeus to tap capital markets to bolster equity as recovery prospects lure foreign funds to battered Greek assets.

"The bids give the HFSF confidence that it will successfully conclude the transaction, raising 2.86 billion euros for Eurobank from the markets," the banker said.

This would mean that the HFSF, which is funded by the European Union under the terms of Greece's international bailout, would not have to spend any of its remaining 11 billion euro capital buffer to prop up Eurobank.

The HFSF, which received 50 billion euros of Greek bailout money, has already financed last year's first round of bank recapitalisations.

The Fairfax-led consortium that bid for Eurobank includes institutional investors Fidelity, Wilbur Ross and Mckenzie, another banker close to the talks told Reuters.

Fairfax has already invested in Greek real estate company Eurobank Properties and acquired a 5 percent stake in Mytilineos, one of the country's biggest mining and energy groups.

Greece broke a four-year exile from debt markets last week with a successful sale of a five-year bond that raised 3 billion euros. Alpha and Piraeus raised a combined 2.95 billion euros last month via equity offerings.

The country's biggest lender, National Bank, is also considering tapping markets with a share offering.

Eurobank's management is on a roadshow in London, meeting long-term investors.

"We are optimistic that the deal will be concluded successfully," one Eurobank executive told Reuters.

Barclays, Deutsche Bank and JP Morgan will lead the bookbuilding to international investors and about 10 percent of the new shares will be offered to domestic investors, the bank's board has said.

Current shareholders, including the HFSF, will waive their rights to the share issue, meaning that the rescue fund's stake will be diluted significantly.