market folly

Daniel Loeb’s hedge fund Third Point has entered into a deal to buy up to euro 45m worth of new shares in AIM listed property company, Dolphin Capital Investors (LON: DCI) . 


A Play on Greece

Dolphin Capital Investors are a large private owner of developable seafront land in Greece and Cyprus. Dolphin also holds a 50% stake in Aristo Developers, the largest holiday-home developer in Cyprus. 

This isn't Third Point's first foray into the mess that is Greece.  Loeb is long Greek government bonds, a position revealed in their Q3 letter.


Special Rights Issue

Via a special rights issue, Dolphin Capital Investors are offering Third Point the chance to buy between euro 30-45m shares at GBP 0.195 per share. At the close on October 18th, DCI’s shares were worth GBP 0.265 so Third Point has the chance to buy their shares at a discount.

When the offering announcement was made on October 3rd, DCI’s shares traded at GBP 0.229 but Dolphin’s shares did trade at around the offer price back in mid-September. It appears that the recent rally in Dolphin’s shares has been brought about primarily by Third Point’s involvement. 

If the rights issue is successful, Third Point will hold between 19-28.5% of DCI’s outstanding shares. If Third Point keep more than 15% of DCI’s outstanding shares they will be able to appoint a non-executive director. 

Only shareholders on the register as of October 10th are eligible to participate in the offering which is expected to take place on October 25th. The minimum investment will be £100,000. Members of the public are not eligible to participate. 

Before the offering could take place, existing shareholders had to agree the special Third Point rights issue at an Emergency General Meeting (EGM) that was held today (October 22nd). DCI’s admission document states that they may not issue shares at less than net asset value. As the shares were trading at a massive 78% discount to NAV, shareholders had to grant permission.  This permission was granted as the resolution "was duly passed" today.

The largest shareholders are BlackRock with 16.42%, Dolphin Capital (the manager) with 15.16% and Fortress Investment Group with 12.16%. 


About Dolphin Capital Investors

Taken from Dolphin Capital Investor’s website – Dolphin is a leading global investor in the residential resort sector in emerging markets and one of the largest real estate investment companies quoted on AIM in terms of net assets. Dolphin seeks to generate strong capital growth for its shareholders by acquiring large seafront sites of striking natural beauty in the eastern Mediterranean, Caribbean and Latin America and developing sophisticated leisure- integrated residential resorts.

Since its inception in 2005, Dolphin has raised €898 million of equity, has become one of the largest private seafront landowners in Greece and Cyprus and has partnered with some of the world's most recognised architects, golf course designers and hotel operators. 

Dolphin's portfolio is currently spread over approximately 63 million m2 of prime coastal developable land and comprises 14 large-scale, leisure-integrated residential resorts under development in Greece, Cyprus, Croatia, Turkey, the Dominican Republic and Panama and a 49.8% strategic participation in Aristo Developers Ltd, which is one of the largest holiday home developers in south east Europe with more than 60 smaller holiday home projects in Cyprus. Dolphin is managed by Dolphin Capital Partners, an independent real estate private equity firm.


For more on this hedge fund's activity, we've posted up Third Point's Q3 letter.