Page 15 - bne magazine February 2022_20220208

bne February 2022 Companies & Markets I 15
bne:Deal
PPF still has the deal- making mojo after death of founder
Petr Kellner
Robert Anderson in Prague
PPF, the adventurous Czech investment group founded by the late billionaire Petr Kellner, could be poised to divest one of its last major assets in Russia, a country in which it has been one of the biggest foreign financial players for the past 20 years.
Russian investment giant Sistema is reported to be close to buying PPF’s consumer finance unit Home Credit’s operations in Russia and Kazakhstan, after earlier speculation that Hungary’s OTP Bank was the favoured buyer.
The report of the sale – which neither side has confirmed – comes after speculation over several months that the unit was for sale. These rumours were boosted by PPF commenting last month that the group was looking to sell operations, or partner them with other companies, in markets with “limited potential".
The potential sale of what has been one of PPF’s crown jewels has naturally sparked speculation that CEO Ladislav Bartonicek is having a clearout of assets and is narrowing the group’s focus following the death of Kellner in a helicopter crash in March last year.
PPF insiders confirm that a lot of deals are currently in the pipeline, raising the question of what the group’s investment strategy now is, and what other businesses among the group’s €40bn of assets might be up for grabs.
Deal-making legend
Petr Kellner was a deal-making legend and by far the most famous and successful Czech businessman of his generation.
The richest man in Central Europe, with a personal wealth estimated at $17.5bn by Forbes, he made his fortune in the ‘Wild East’ of the Czech transformation from Communism in the early 1990s, becoming a major regional player in consumer finance, telecoms and media.
He was also one of the first regional tycoons to outgrow the local markets and expand globally. After launching the Home Credit consumer finance format in Central Europe in 1997, he expanded
Petr Kellner was a deal-making legend and by far the most famous and successful Czech businessman of his generation.
it east to Russia in 2002, and then from 2007 into China, making it the world’s largest non-banking consumer lender.
In Russia, Kellner diversified into real estate, agriculture (Rav Agro), electronics retail (Eldorado) and gold mining (Polymetal), as well as insurance, by swapping stakes – and sometimes going head to head – with the country’s powerful oligarchs.
But even before his death last year PPF was beginning to shift its assets away from Russia and Asia and back into developed European markets – in particular the Czech Republic itself – as well as the Balkans.
PPF has been selling down its Russian assets gradually over the past decade, reducing its stake in Polymetal and disposing of the Eldorado electronics and domestic appliances chain
in 2016. But the sale of Home Credit Russia would be a huge step-up in this disposal programme.
Arguably this shift has been accelerated by PPF's decline in political influence following the death of Kellner, and by the reverses for Czech President Milos Zeman's foreign policy of pursuing closer links with Beijing and Moscow. Kellner had forged a bond with Zeman, especially over PPF's drive into China, and the billionaire even gave the president a lift back in a private jet from a trip to China in 2014. This kind of political support and 'cover; is just no longer available or possible.
Cutting exposures
There is now speculation that as well as Home Credit Russia, PPF is targeting disposals of Home Credit’s Asian operations in India, Vietnam, Indonesia and the Philippines. Bloomberg has reported that those assets could be worth up to $2.5bn.
In China PPF is reducing its exposure and is rumoured to be looking for a partner. Home Credit operating revenue there fell to €725mn in the first half, from €1.6bn a year ago, under pressure from Beijing’s restrictions on banks’ access to local funding sources.
PPF’s disposals partly reflect Home Credit’s struggle in Russia, China and India with problem loans, which has been
www.bne.eu