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bne July 2017 Cover story I 29
A deal to for CEFC to raise its 9% stake to 50% in J&T Financial Group – one
of the biggest investment groups to emerge from the privatisation chaos across the region in the 1990s – is stuck in the regulatory process. Perhaps most tricky for CEFC is that J&T’s ownership of Slovak banks puts the deal in front of the European Central Bank, which demands full ownership transparency.
However, it’s not just regulators giving the Chinese a headache.
A deal to buy travel portal Invia from a private equity fund featuring Kellner and J&T alumni – including Dan-
iel Kretinsky, owner of closely-held energy holding EPH as well as Slavia’s bitter cross-city rival Sparta Praha – soon unravelled, with CEFC pulling back on the stake it agreed to take.
The Chinese company reportedly per- formed a similar about turn earlier this year over its purchase of 49% in Empresa media group. Meanwhile, talks on
a buyout of at least part of Penta –
a group with a very similar profile to J&T – have now lapsed, according to sources involved in the deal, despite having reached the due diligence stage last year.
CEFC is also understood to be strug- gling with local wheeling and dealing. When the Chinese company handed J&T CZK7.5bn (€286mn) to buy the Florenti- num real estate development in Prague earlier this year, a dispute with Tvrdik ended, according to sources, with the
Czech unit headed by the Slavia chair- man taking control of the asset, rather than the Hong Kong unit the Shanghai- based management had planned.
Tvrdik is not short of ambition. The flamboyant former minister is now using his elevated status at Prague Castle and within the sport to lead
a war against Roman Berbr, known
as the grey cardinal of Czech football, and his grip on the Czech Football Association, says Michal Petrak, a journalist at isport.cz. Miroslav Pelta, head of the football association, was arrested in May on corruption charges.
Meanwhile, other Chinese investors complain that they are finding deals even harder to come by because Tvrdik has over-ridden
the Czech-Chinese Chamber of Commerce, which he also heads.
With the purchase of Slavia and then the Eden stadium, CEFC at least has something in the bag. “It’s understand- able that they wanted to get the stadi- um,” says Jan Machacek, a journalist for broadsheet Lidove Noviny. “That is very valuable real estate.”
However, the lack of transparency and double dealing that has plagued Slavia over recent years remains a bug for the Chinese. Barely had the celebrations over the purchase of Eden finished when it emerged that German construction giant Hochtief, the contractor that built the stadium, launched a lawsuit over
an attached plot on which it claims it has held a contract for years.
Should CEFC tire of the shenanigans, many liberal Czechs would likely wel- come its departure. Andrej Babis, the oli- garch that appears destined for the PM’s chair at October’s elections, has noted that his ally Zeman’s drive for Chinese investment has largely failed thus far.
There have been no greenfield invest- ments or acquisitions followed by largescale expansion, he has noted. In short, the Chinese are not creating jobs for Czechs. However, that’s a standard model for Chinese investment. When there are jobs to be done, cheaper workers are often imported from home.
But not football players. Slavia is now competing with the big boys of Czech football again for the top players.
“There’s no plan B. What happens if the Chinese leave?”
“The Chinese had to be very careful to find out who to pay for the stadium,” points out a former press spokesman for Slavia. “It’s never been clear who owns the asset.” Rumours of Caymen Island outfits and mob ties abound.
“It was a bit of a miracle that they man- aged it,” he laughs. “I doubt anyone will ever know who they bought it from.”
“The club won the transfer race last season by offering strong – though not crazy – wages,” notes Petrak.
“That’s made the fans happy,” says the former press spokesman, “but we don’t really know who owns us. There’s no plan B. What happens if the Chinese leave?”
For more articles about Chinese investment in Central and Eastern Europe, go to
www.intellinews.com/chinarising
www.bne.eu