CEE'S TOP BUSINESS LEADERS: Central Europe

CEE'S TOP BUSINESS LEADERS: Central Europe
From left: Petr Kellner (Czech, ranked 1); Bogoljub Karic (Serbia, 1), Mikhail Fridman (Russia, 1), Mamuka Khazaradze (Georgia, 2).
By bne IntelliNews May 12, 2017

Petr Kellner

(Czech Republic, 1)

Of all Central Europe’s tycoons, Petr Kellner is by far the richest (he has a net worth of $13.2bn, according to Forbes) and one of the most reclusive, very rarely giving interviews or even delivering pronouncements, writes Robert Anderson.

Though other so-called Czech oligarchs are far more visible, he nevertheless remains a towering behind the scenes presence, someone who has to be reckoned with whenever any big deal is in the offing.

Kellner, now 52, has long since outgrown his home country, and he is now big and bad enough to mix it with the Russian and Chinese oligarchs in their home turfs. Dutch-registered PPF Group, which he founded and owns almost 99% of, now has assets of €24bn, and employs some 113,000 people, only 9,000 of whom are in the Czech Republic.

Like several of the super rich in the former Czechoslovakia, Kellner made his fortune by setting up an investment fund during Vaclav Klaus’ botched coupon privatisation programme in the early 1990s. But unlike many of his fellow asset strippers and corporate raiders, PPF not only delivered a decent return for its coupon investors, but also had the stamina to become a long-term player on the Czech financial scene.

PPF seized control of monopoly insurer Ceska Pojistovna in 1996 after buying a 20% stake. This enabled it, together with allies, to outvote the state.  Afterwards, Klaus’ finance minister, Ivan Kocarnik, who appeared to turn a blind eye to the state’s loss of control, glided through the revolving door to become the insurer’s chairman. Much later, Kellner gave a generous endowment to Klaus’ personal foundation.

Kellner overhauled the dinosaur insurer, bought out the state in 2001, and used its financial muscle to expand into other businesses and make opportunistic ventures. In 2007 he agreed to fold Ceska Pojistovna into a joint venture with Generali, which he exited in 2012 for €2.5bn.

This sale enabled Kellner to supercharge the expansion of Home Credit, a consumer lender he had launched in 1997. After experimenting with the format in Central Europe, he expanded east to Russia (especially the regional cities) in 2002, and then from 2007 into China, now seen as the source of future growth.

However, in recent years the billionaire has had several reverses in Russia, with bad loans soaring after the 2008 global financial crisis and during the country’s ongoing economic weakness. He began to scale back his other investments there last year, selling the Eldorado electronic retail chain, and reducing his stake in Polymetal, the London-listed gold and silver miner, to 13%.

Back in the Czech Republic, PPF’s most recent big move was to buy 02 ’s Czech and Slovak operations from Telefonica for $3.2bn in 2014. PPF voluntarily divided the largest Czech telecom into a listed operator and a wholly owned infrastructure company, increasing its combined value dramatically. It is expected to eventually sell off the operator.

Though he made his flying start in business under the rightwing Klaus, Kellner has never been closely involved with politics. Indeed Kellner has managed to cultivate the populist President Milos Zeman, even lending the onetime Social Democrat his private jet to fly back from China in 2014. Zeman has enthusiastically pushed Home Credit’s expansion into China on his numerous visits to Beijing.

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Lorincz Meszaros

(Hungary, 4)

Lorincz Meszaros puts his success down to three things: “God, good luck and the person of Viktor Orban.” Whatever the proportions that each contributed, the recipe has certainly worked. This decade the pipe-fitter has had a meteoric rise into a business magnate, helped by some €1bn in EU contracts in the last five years.

Born in Karcag, on the Hungarian Great Plain (Alfold), in 1966, Meszaros rose from humble origins to set up a pipe-fitting business during the more relaxed Communist era in the 1980s. He claims to have built his first house in the town “brick by brick”.

Meszaros also claims to be an ex-school mate of the Hungarian premier, though it was on the football field where this most fateful of friendships was forged. The pair met at Felcsut FC, the tiny semi-professional village club that Orban played for during his first tenure as prime minister from 1998-2002 and where he keeps a home. Orbán then made him the president of the village football academy that he set up there in 2006.

He is proud of being completely loyal to Orban. According to Krisztina Ferenczi, a journalist who over 15 years has became the main expert on the Orbán family finances, Mészáros “would run through a brick wall for Orbán”.

His wealth has soared since he became Felcsút village mayor in a 2011 by-election after his predecessor – one of the few to defeat a Fidesz candidate in the 2010 local election landslide – was dismissed for having a small unpaid public bill.

Pre-2011, Mészáros’s annual income averaged around HUF19mn (€60,000). Since then Meszaros has become a major beneficiary of public tenders and a large-scale investor in road construction, real estate development, tourism and hotels. He has also bought the Croatian football club NG Osijek, and owns a luxurious €2.2mn villa on the island of Vir, together with a yacht.

Meszaros’s ascendance accelerated further in the wake of the very public fallout between Orban and his  dorm-mate turned “consiglieri”, Lajos Simicska, in February, 2015.

Meszaros has overseen a growing network of businesses, building developments and media outlets to counter the now hostile Simicska, who is waging war against the prime minister in his own media outlets Hir TV, Magyar Nemzet and Index.hu. He is also now a major media owner through his interests in Konzum, Opimus, Opimus Press and Mediaworks, the owner of national cable news channel Echo TV, the national sports daily Nemzeti Sport, economic daily Vilaggazdasag, and eight local newspapers.

Last October, Hungary’s newspaper of record Nepszabadsag shut down unexpectedly. It was later revealed that its owner, Vienna Capital Partners, had sold the media company Mediaworks, with a dozen other well-circulated media products, to Opimus Press, a subsidiary of Opimus Holding. Local media noted that Hungarian regulatory bodies authorised the acquisition in record time. In March Meszaros was revealed as the real owner of Opimus Press.

“I don’t give a shit about what others say about me, because, believe me, I’m a cocky guy from the Alfold,” Meszaros once said.  This March opposition MPs brandished in parliament a cardboard cut-out of him holding a sign saying “straw man”. He sued opposition party Egyutt for alleging that he was holding Orban’s financial interests. On March 27 Meszaros lost his appeal in the case at the Budapest Court of Appeals.

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Maciej Formanowicz

(Poland, 4)

At 67, Maciej Formanowicz, the CEO of the Polish furniture maker Forte, does not belong to that generation of Polish businesspeople who started out just after communism collapsed.

Instead, Formanowicz’s experience is rooted in the 1980s, when Poland was in political turmoil. His generation of business people learned the ropes well enough under communism to take advantage of it when the state-owned economy came crashing down.

Pushed by his father, who was working in the furniture segment, Formanowicz – a youngster more interested in literature than manufacturing – began studying wood technology in Poznan in the late 1960s. After graduation, he took jobs in state-run furniture factories and quickly found he “wanted to be a capitalist”, starting his own company, Makro, in 1987.

“I was a wood technology engineer. Thanks to my father and internships I did as a student I knew how the industry worked. That’s where my entrepreneurship, vision, the willingness to take risk and stubbornness come from,” Formanowicz told Gazeta Wyborcza last year.

Makro fell victim to the turbulent early days of the Polish transformation when the suddenly freed zloty caused the company’s foreign debt to balloon beyond its ability to service it. Yet as Poland embarked on privatisation, Formanowicz saw an opportunity to take over a furniture factory in Ostrow Mazowiecka.

He was quick to recognise he could be competitive on foreign markets that have much greater purchasing power than Poland.

“An average Pole buys €100 worth of furniture in a year. The same figure for Germany is €600,” Formanowicz likes to say in interviews. Germany is an important market for Forte, but the company is also selling further west, in the Netherlands and the UK.

The success of the company has kept propelling Formanowicz up the list of the 100 richest Poles in the past four years. On the 2017 list, compiled by the Polish edition of Forbes each year, Formanowicz is 62nd with wealth estimated at some PLn660mn (€154mn).

These profiles are part of bne IntelliNews' special cover feature on the top business figures in Central and Eastern Europe, published in our May magazine, with cartoons by Vladimir Kremlev. Our correspondents ranked business leaders in each CEE/CIS country not just on wealth but on influence. The full magazine can be viewed here. The tables for Central Europe can be viewed in the pdf below:

CEtable.pdf

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