Czech entrepreneurs are increasingly investing in companies outside their country’s borders, the business daily Hospodářské noviny reported on Monday, citing a 2014 mergers and acquisitions report by consultants EY. The main reason for the trend is the fact that domestic banks are offering bigger and cheaper loans.
Indeed, of 140 major deals of that nature conducted by companies from the entire Central and Eastern Europe region last year, Czech investors were behind almost a quarter.
Czechs are also snapping up firms on the domestic market. In 2014 over 200 major businesses changed hands at a cost of CZK 166 billion. This accounted for a full fifth of all the deals done in the region, Hospodářské noviny wrote, again citing the EY report.
The chief reason for all these acquisitions is that Czech banks have an abundance of money at their disposal and are therefore offering bigger and cheaper loans than in the past.
Czech banks are very well capitalised, Petr Kříž, executive director in mergers and acquisitions at the Czech branch of EY, told Hospodářské noviny. Companies in, for instance, Slovenia can only dream of such a situation, he said.
In the past banks were willing to lend between a third and a half of the purchase price of a company. Today, however, there are cases of banks lending the entire sum. Mr. Kříž said he expected this trend to continue for a number of years.
The biggest single international acquisition by a Czech last year was billionaire real estate magnate Radovan Vítek’s purchase for CZK 35 billion of GSG Group; previously known as Orco Germany, it is a major player in the commercial property rental business in Germany.
Real estate is one of the sectors in which Czech companies typically invest abroad. Others are energy and manufacturing.
Energetický a průmyslový holding, owned by another Czech billionaire, Daniel Křetínský, has been investing in coal-fired power stations, buying them up in the UK, Italy and Germany. He also owns mines in the latter state, Hospodářské noviny said.
Meanwhile, Andrej Babiš, who owns domestic food giant Agrofert and is minister of finance, bought Germany’s biggest bakers Lieken in 2013.
Germany’s popularity as a popular destination for Czechs looking to make major investments is also borne out by the fact that the richest Czech female entrepreneur Jitka Cechlová Komárková acquired train wheels maker GHH Radsatz in the Ruhr.
Igor Mesenský of consultants TPA Horwath told Hospodářské noviny that Germany and Austria were the best fit for Czech investors. The Slovak market is “the most natural” but too small, Czechs have been unable to make significant inroads into Poland and Hungary has a relatively large grey economy, he said.