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Czech billionaires profiting from crisis

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Although the economy has been suffering from the impacts of the crisis, the most influential entrepreneurs are using the crunch to their benefit. According to Hospodářské noviny’s figures, Czech billionaires have spent some CZK 60 billion on foreign and domestic properties since the beginning of 2008.

Petr Kellner and his PPF Group have been by far the most active. The group has invested more than CZK 40 billion in acquisitions so far, and now Kellner is collaborating with the Italian insurance giant Generali to invest just a bit less in a new investment fund, PPF Partners, scheduled to launch in early June.

Kellner has been able to expand his acquisitions thanks to the sale of his insurance business to Generali in 2007. “Of course it came in handy to close a EUR 3 billion deal half a year before the crisis,” PPF Group co-owner Jiří Šmejc said in an interview for Hospodářské noviny. He said that if it had been postponed by only a few months, the transaction could not have been closed.

More businesses got lucky this way. Leoš Novotný sold a majority stake in his food processing company Hamé in spring 2008, shortly before the crisis hit hard. He reportedly earned up to CZK 5 billion, which he plans to further invest. “I opened three funds for the central European region,” he told HN.

Zdeněk Bakala (the owner of Economia, a publisher of HN) also timed his dealings well after postponing for nine months the decision to issue shares in the mining company NWR on the Prague Stock Exchange. The public offering happened in April of last year – in a short period during which the crisis weakened and markets grew. Investors paid more than CZK 30 billion for NWR shares, and when prices dropped again at the end of summer, Bakala had the money he is now investing in another part of his business: the NWR Transportation holding. The big earnings allow him to better cope with the falling coal market, which is pushing his mining business into huge losses.

Investors who refrained from accruing debt in the period of growth are in the best position to expand now. “It was important not to avoid euphoria in the period growth when everything was sold overpriced. We didn’t mind waiting, and now, when the prices are low, we have about EUR 500 million to spend,” Penta chief Marek Dospiva said.

His group was taunted in the previous years because of its decision to cancel a number of deals over unfavourable terms at the very last moment. “But only because we didn’t put the company in debt, can we rely on financial backing from the banks,” Dospiva said.

Kellner is tops
Czech billionaires have invested some CZK 60 billion since the beginning of the economic crisis. Two-thirds of the total investments come from Petr Kellner’s PPF.

Kellner 40bn
Babiš 8bn
Bakala 5bn
Dospiva 2,5bn

(Only rough estimates)

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