The financial difficulties experienced by many real estate and industrial firms have become an opportunity for advantageous acquisitions this year. Consultants and private bankers agree that the buyers are not coming just from the ranks of the richest people, but also include Czechs with property in the order of millions of crowns.
Offered for sale are many developer projects in different stages of construction, said Dalibor Hlaváč, head of financial advisory at Deloitte. “Among the buyers are mainly rich individuals and financial groups,” he said. Typical for these sales is financial pressure exerted by the seller, said Hlaváč. “Speed eliminates a number of potential buyers and means an opportunity for predators that can acquire a project with a certain discount this way,” he added.
The transactions are financed with both cash and bank loans. According to information available on the market, banks are willing to lend roughly 50% of the purchase price of a project, and buyers need to cover the rest. Richard Kovář of Redbaenk says that not all projects are saleable. “If a bank provided let’s say 80% for a project and the value of the collateral dropped by 30%, then for owners who do not care so much about their reputation it is easier to write the project off than rescuing it,” he added.
Besides properties, bank clients also buy businesses. Private banking head at UniCredit Bank, Jan Troníček, said that rich people also lend money to companies. “In the course of the past year, access to loans has become more difficult or more expensive for a number of businesses, so their owners in many cases resort to loans from private sources to finance their firms,” he added.
Those interested in buying a company are mostly people who already ran a business in the past. “Now they return to business this way,” said Martin Loubr, head of private banking at Česká spořitelna.
Private banking director at Sal. Oppenheim, Jan Prachař, said that some companies are now available at a fraction of their previous value owing to the crisis. On the other hand, many entrepreneurs withdraw their free resources from banks and lend the money to their companies in an effort to improve the financial situation at their firms.
Other entrepreneurs, by contrast, are trying to take advantage of the crisis to get rid of competitors. “They are searching for and waiting for an opportunity to buy stakes in firms, which are closed to them in terms of their line of business and knowledge and whose prices have now become attractive owing to the negative development,” said Jaroslav Velecký, private banking director in Volksbank.
Richer people now also buy at auctions to a greater extent. “In the past it was mainly firms that took part in auctions, now we can see more individuals there,” said Jaroslav Hradil, head of the auction company Prokonzulta.