ECM Partners’ Savvas Liasis: "We are looking to explore more healthcare opportunities in Cyprus"

Maintaining a strong portfolio in Central and Southeast Europe, ECM Partners has made a strategic foray into a handful of key investments in Cyprus's healthcare sector and is on the lookout for more, Savvas Liasis, Chairman and co-founder of ECM Partners reveals.

"The healthcare sector was refreshing because we found a real opportunity," Liasis explains in a recent interview with GOLD magazine.

The private equity firm secured a 72% stake – soon to be 75% – in Limassol’s Ygia Polyclinic, one of the island’s oldest private hospitals.

ECM Partners also acquired the Londa Residences in Limassol and, for the major conversion project, brought in the celebrated Parisian interior designer, Thierry Lemaire, responsible for the French Presidential Office among many others. The firm also snapped up 16 villas in Latchi in the Paphos district. Both Londa Residences and the villas are managed by Elements Capital Management, which is an affiliate and operating partner to ECM Partners and is owned by Savvas Liasis and Andreas Georghallis.

There were talks about buying Starbucks Greece and Cyprus but that idea fizzled out when a solution that satisfied all parties could not be found. And that, according to Liasis, while they are looking to explore more healthcare opportunities in Cyprus, is where ECM’s Cypriot chapter will likely close, as the country simply doesn’t offer the manufacturing base or brick-and-mortar opportunities that interest the firm, and there’s only so much one can do in hospitality on the island.

"The healthcare sector was refreshing because we found a real opportunity," Liasis says explaining the key was a dislocation in the market with the private hospital entering Cyprus' new national health system.

"We had a clear business plan to make a difference," he adds. The ownership structure was a tangled mess, with about 150 doctors each holding a tiny slice of the pie, meaning there was no unified support behind management to execute any significant turnaround. "Cleaning up the ownership was half the battle," Liasis notes. Once that was sorted, the path to revitalising the business became much clearer.

A strong portfolio

Through its activities including and beyond Cyprus, ECM Partners has deployed around €1 billion so far with 27 portfolio companies and five funds – the fifth and latest fund is looking to raise €250 million with a first close scheduled for Q1 2025. And it has lost no money from its investments, Liasis stresses.

By staying small and agile and true to its origins, the firm has deftly sidestepped the macroeconomic pressures that have squeezed so much of the Private Equity industry in recent years, particularly those using the old playbook of buying a business, drowning it in debt and making a hasty exit.

High interest rates, says Liasis, are hurting both the bigger players that work with hundreds of billions in assets and those smaller firms using the rinse-and-repeat model, as it makes it tougher to offload assets, which creates a domino effect: LPs aren’t getting receptions or disruptions and, suddenly, fundraising becomes an uphill battle. As for the more desperate tactics that some big PE firms have resorted to in this environment – Payment in Kind (PIK) notes or dubious Net Asset Valuation (NAV) adjustments – Liasis is unimpressed. The smaller firms, he contends, still clinging to the rinse-and-repeat model, will be wiped off the map.

So, will this humble the industry? Liasis agrees, explaining, “It happens every five or six years. So it kind of clears the industry out a little bit.”

Foray into the brokerage world

Also a film producer, Liasis cut his professional teeth in the fiercely competitive brokerage world, first in Cyprus and then in the UK, with his big break coming when he launched Easybroker International Ltd in London, of which he served as CEO. The broker was one of the first independent firms offering direct market access to buy-side institutions across 40-plus markets.

With bigwigs like Lehman Brothers and Goldman Sachs peddling their platforms with razor-thin margins, competing on price was out of the question, so Easybroker went for low-hanging fruit in markets like Portugal, Slovenia and Croatia where the London guys weren’t exactly queuing up to serve. “Institutional players had very active portfolios in these markets, so they were ideal clients for us and became a significant part of Easybroker’s success,” he recalls.

By 2007, global brokerage and hedge fund specialist AKJ had swooped in, acquiring the client and front-office operations of the firm, which was shifting a hefty US$2 billion a month in trading volume at its peak. The broker was also the start of Liasis’ deep ties with Slovenia and Croatia, leading him to Ales Skoberne and Dejan Rajba, the people with whom he’d later launch ECM Partners.

The origins of ECM Partners

Founded in 1990 in Slovenia and originally called NFD, it operated as a fund manager that grew into a regional heavyweight, with a retail client base of around 22,000. The timing was significant: it was just after the collapse of the Eastern Soviet bloc, when governments were hastily distributing ownership stakes in key firms to the public, a kind of crash course in capitalism for the ex-communist states.

Around 2013, Liasis, alongside Skoberne and Rajbar (they serve as CEO and CIO, respectively), saw that NFD was feeling the pinch. “It was part of a larger group facing a bit of distress and that asset was carved out and sold off as a non-core asset,” Liasis explains.

So, having bought NFD, the three restructured its operations, bumped the assets under management from €70 million to a respectable €100 million and sold off the retail arm, retaining the management company, which eventually evolved into ECM Partners.

Initially, the firm focused on distressed credit with backing from hedge funds, private equity and credit funds in London. Capital providers like York Capital Management and the multi-family office HBS saw ECM as a conduit for opportunities in an otherwise underserved market. It was a classic Limited Partner (LP) relationship, Liasis explains, with the funds treating them as their boots on the ground.

As ECM’s deals in Slovenia and Croatia gained traction and greater attention, the ripple effect had institutional players (the usual suspects –insurance companies and pension funds) knocking on their door, eager to get a piece of the action. One such deal was managing some 40% of Slovenia's tourism GDP by acquiring the Sava Hotel Group in 2015. This growing interest created a perfect opportunity for ECM to launch its first discretionary fund a couple of years later.

Liasis reflects, “We were credit-driven from the start and that has never left our DNA, even now when our strategy is entirely private equity and opportunistic buyouts.” According to Liasis, the firm is always hedging its bets, scrutinising the downside as much as possible. If an investment doesn’t perform as expected, it needs assets that can be spun off to mitigate losses.

The sweet spot is healthy assets caught in a storm, often tangled up with an over-leveraged parent company or bogged down by complex litigation, allowing ECM to step in and turn things around. As the founders don’t pretend to be industry experts, they partner up with reputable operators who know the ropes – it is here that the parallel with Liasis’ producing role arises, reflecting the practical wisdom of knowing enough to know that you don’t know enough. That said, they aren’t opportunists without boundaries. “We avoid shipping, greenfield development and buying and selling land, as you can’t create much value there," he says.

Track record

ECM Partners has made nine exits with a 2.6x Multiple on Invested Capital (MIOC) and an Internal Rate of Return (IRR) of the portfolio at 34.4%. One of the most recent exits involves FAMAR, a leading Greek contract pharmaceutical manufacturer with a prestigious blue-chip client roster. FAMAR had hit a rough financial patch, which ultimately led Pillarstone, a platform established by KKR Credit, to step in and take control. The strategy was to sell off FAMAR by splitting it into two perimeters: the northern segment (France, the Netherlands, and Canada) and the southern segment (Greece, Italy, and Spain). ECM Partners, in collaboration with York Capital Management, swooped in to acquire FAMAR’s southern perimeter in 2019; York exited two years later, selling its stake to ECM and Metric Capital Partners.

Nonetheless, Liasis recalls how they spotted a hole of around €30 million due to supplier backlog and catch-up capital expenditures, like upgrading old equipment. So, they did their homework by going around and talking to some of FAMAR’s key clients, asking why they hadn’t jumped ship yet and the answer was straightforward: it takes a good two to three years to switch contract manufacturers and during that time, your products disappear from the shelves. “It’s a sticky business,” he says. “If you are a decent manufacturer, it’s really hard to lose business.” As usual, ECM onboarded a seasoned operating team to right the ship. This summer, the firm exited the project, with Jefferies running a fairly competitive process. "We accomplished a full successful turnaround and multiplied the EBITDA,” Liasis mentions.

Another telling example of ECM’s strategy involves Merkur, the distressed Slovenian DIY chain store. The setup was complex: the company was split into two different processes, one held by a bankruptcy administrator and the other by a bad bank, both distressed sellers that needed to divest. Ales Skoberne, who is with Liasis during our call, spotted the opportunity and bundled the two together – something that no one else had thought of doing. They then implemented a market-standard commercial agreement on rents, which enabled them to run a competitive retail sales process within a year, recovering 1.3x their invested capital and leaving them with a streamlined, profitable DIY operating asset. Having exited in Q2 2022, the results were a 2x net MOIC and 28.5% net IRR. “It’s not brain surgery,” Liasis says, “but it’s the kind of opportunity that this region offers. And because there aren’t many competitors of our size who can execute trades like this, the space is wide open for us.”

(Original photo by Michalis Kyprianou)

Another version of this interview first appeared in the September edition of GOLD magazine. Click here to view it.