The new gold rush in Greece: distressed debt

With thousands of small and medium-sized enterprises (SMEs) facing constrained access to bank financing, a new funding ecosystem is taking shape. Investment funds, loan servicers, and specialized investors are increasingly stepping in to bridge the financing gap, deploying capital across businesses, real estate assets, and development projects. As banks become more focused on capital efficiency and risk management, private financing is emerging as a critical engine of growth, restructuring, and value creation for the Greek economy.

For decades, Greek SMEs relied almost exclusively on bank lending as their primary source of financing. However, the prolonged financial crisis weakened the banking sector and significantly increased risk premiums, leaving thousands of businesses unable to access capital—even when they possessed sound business models, export potential, or substantial asset bases. Today, in a markedly different economic landscape, private financing is stepping in to address this structural funding shortfall.

Private credit, special situations funds, and asset-based financing solutions are gradually evolving into an alternative financing channel for the real economy. In Greece, where more than 95% of businesses are SMEs, the growth potential of this market is particularly significant.

The key advantage of private capital lies in its flexibility. Unlike traditional banking institutions, private credit funds can evaluate more complex or non-standard situations: businesses with elevated leverage but strong cash generation, family-owned companies seeking expansion capital, firms experiencing temporary liquidity constraints, or sectors that require swift decision-making and specialized industry expertise.

The Greek private credit market is now moving beyond theory and into execution. As banks become increasingly selective, borrowing costs remain elevated, and SMEs seek funding for growth initiatives, restructurings, acquisitions, and working capital needs, private credit investors are beginning to view Greece as a market offering attractive risk-adjusted returns. Importantly, the opportunity extends far beyond distressed situations. Entire sectors of the economy are actively searching for alternative sources of capital and more flexible financing structures.

Among the most compelling opportunities is the food and agribusiness sector, which accounts for approximately 25% of Greek manufacturing output and generates more than €20 billion in direct and indirect turnover. The highly fragmented nature of the market creates fertile conditions for consolidation, acquisitions, and growth financing, particularly among export-oriented companies seeking scale and international expansion.

Logistics and warehousing represent another high-growth segment. Driven by the strategic importance of Greek ports, the continued expansion of e-commerce, and nearshoring trends across Europe, Greece is increasingly positioning itself as a regional logistics hub. The market for modern warehouse facilities is expected to exceed 910,000 square meters of new developments by 2026, while yields on prime logistics assets remain above those of more mature European markets. This dynamic is creating strong demand for development finance, asset-backed lending, and project-specific capital solutions.

The hospitality sector continues to attract significant investor interest. Although Greek tourism generated more than €21 billion in travel receipts in 2024, a large portion of the market remains undercapitalized. Family offices, private debt funds, and alternative lenders are increasingly financing renovations, repositioning strategies, and acquisitions of small and mid-sized hotel assets that often face challenges in securing traditional bank financing.

In construction and building materials, the rapid expansion of infrastructure projects, data centers, residential developments, and energy investments is generating substantial capital requirements. Sector output grew by nearly 5% in 2024, while demand for bridge financing, equipment financing, and project-related funding continues to accelerate.

At the same time, private credit is expanding into real estate special situations, financing distressed assets, conversion projects, student housing developments, serviced apartment platforms, and sale-and-leaseback transactions. These strategies allow investors to unlock value in segments that remain underserved by conventional lenders.

Yet the most important opportunity lies elsewhere. Across Greece, thousands of SMEs possess strong underlying assets, established market positions, and viable growth prospects, but continue to face limited access to liquidity. This is precisely where private financing seeks to establish a lasting footprint—not merely by filling the gaps left by traditional banks, but by fostering the development of a new capital market for Greece’s entrepreneurial middle market. In doing so, private capital has the potential to become a central pillar of the country’s next phase of economic growth, business transformation, and long-term value creation.