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Ladislav Bartoníček: Every business has its rules and logic

PPF Group

13/9/2021 | 21 minutes to read

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Forbes Interview


This interview was unthinkable half a year ago. The then-head of PPF Group and the richest Czech, Petr Kellner, kept the media at a distance for more than a decade. However, a new era is arriving with his successor. The Group, which is celebrating its thirtieth anniversary in September, has opened its curtains and is beginning to communicate with the outside world more. Furthermore, the Group has had a dedicated marketing specialist looking after the overall image of the PPF brand since May of last year.

But let’s not expect full transparency about all PPF’s operations. Kellner’s successor, Ladislav Bartoníček, is somehow like him. He is not talkative, speaks softly, and does not use big words. He weighs each one so there are often a few seconds of silence before he answers. He didn’t hesitate to explicitly admit that he really doesn’t like interviews (let alone doing media photoshoots) during this very interview, and he would much rather spend the time working.

Nevertheless, we met quite unusually on the outskirts of Budapest; specifically at the headquarters of PPF’s local telecommunications operator, Telenor Hungary, where Bartoníček’s several-day journey through the Group’s Central European and Southeastern European companies concluded. He described the reasons for his tour of PPF’s operations in Serbia, Romania, Bulgaria, and Slovakia with a bit of exaggeration as to “introduce myself and check on our teams’ morale.” Before our interview, he jumped onto the podium at Telenor’s headquarters and described the raison d'etre of the Czech investment group with three letters in its name (which earned the now-deceased Kellner a fortune of about CZK 350 billion, now primarily held by his family) to several hundred employees in the audience. Ladislav Bartoníček and another member of the Executive Committee, Jean-Pascal Duvieusart, still each own 0.535 % of the Group. “Our businesses span twenty-five countries and three continents, ranging from finance and telecommunications to media and e-commerce,” Ladislav Bartoníček emphasized during the interview. He took over in difficult times. In 2020, the Group posted a loss of EUR 291 million (or CZK 7.4 billion), its first-ever, mainly due to what used to be its golden egg—the Home Credit consumer finance company that is suffering greatly from the coronavirus pandemic.

Bartoníček is extremely careful about predictions, but nevertheless he believes that Home Credit can rebound in China if the local regulatory environment is at least somewhat business friendly.

Caution is a recurring undertone in every answer from the 57-year-old executive who otherwise loves snowboarding, hiking, and modern art; and who often wears an Apple Watch instead of a Swiss timepiece. He answers the most fundamental questions purely diplomatically, if at all. To expect Kellner’s successor to suddenly shine a spotlight on large deals would be naïve, anyway.

PPF has several large transactions in the pipeline on many fronts. It has been trying to merge its Czech and Slovak retail banking and consumer finance assets led by Air Bank with Moneta for a second time. The proposed merger won approval from more than a half, but not the required 75% of Moneta shareholders at the June extraordinary general meeting. “It was one of the expected outcomes, and in the end, it happened,” Bartoníček suffices with a neutral comment. But then he adds that PPF still wants the merger very much and continues to work on it. History has shown that if they want something on Evropská Street [PPF HQ], they usually get it.

Then there is speculation about the possible initial public offering of the Cetin infrastructure company on capital markets. Moreover, the delisting of O2 Czech Republic’s shares from the Prague Stock Exchange is already proceeding at full speed. The sale of Mall Group is another thing. PPF is a financing partner for this e-commerce platform, holding 40% of its shares. We covered this in detail in Forbes’ previous issue. And finally, there is a completely new and for many a surprising investment. A joint venture with French Groupe Beneteau, a manufacturer of recreational vessels and sailboats. For PPF the goal is clear: To build a global leader in the charter sailboat industry.

Ladislav Bartoníček is also trying to prepare PPF for the future, including making unexpected investment deals. This is his way of continuing the legacy of Petr Kellner, a man who was known for his creativity in business and deal making.

Can Petr Kellner ever be replaced?

He certainly cannot be replaced. As a person, a friend, a father: he cannot be replaced. From a business point of view, if PPF is to function and grow in the future, attempting to replace Petr Kellner is not a solution because he was unique. It’s important to put together a team that can fill in the relatively large gap created by his absence. He was able to handle and cope with an incredible breadth of business and information simultaneously.

Do you feel pressure in the new role in the sense that people would compare you and your actions to Petr Kellner?

I would be crazy to try to make myself into him. I don’t pressure myself or even feel this point of view. Like I said, PPF must tread the path forward in its own way, building on what we have created. Where I feel pressure is responsibility. I was used to being responsible for a certain part of the business, while now I’m responsible for all PPF’s businesses. And that’s a heavy load of course.

When you make business decisions, do you ever think about what Petr Kellner would say? How would he behave?

Sometimes, yes.

And how does it affect you?

We worked together for thirty years and learned certain things from each other. I don’t see it as a contradiction of what things are, but it’s a sort of self-check. Is it possible to look at it from another angle? Would Petr look at it differently or not? that’s what I think about. It isn’t a crucial part of my decision-making, but it certainly doesn’t hurt.

Are you significantly different from him in anything that he was?

Of course. Sometimes we differed on, say, a specific strategy in terms of immediate risk. He was a bigger risk taker, that’s for sure. It has to do with the fact that when you are an absolute majority owner, your decision-making works a little differently. It depends on you. I’m partly responsible for my assets, but primarily for his family’s assets, so it’s different.

What was the last thing you and Petr Kellner dealt with?

I remember that exactly. We talked about investment opportunities in telecommunications, coincidentally here in Central Europe and the Balkans. That was Friday night… [Petr Kellner tragically died on Saturday, March 27, 2021, editorial note].

What would he say about your latest investment in charter boats?

We talked about it, so he wouldn’t have been surprised.

Is this a logical step for you? From the outside, it looked more like a step in a completely different direction.

It’s nice to sometimes take steps that don’t seem logical at first glance. The logic may become apparent on the second or third look. We have never resisted and will never resist entering new business waters, and this is a beautiful example. The charter sailboat sector has been severely hit by the coronavirus pandemic having made travel almost impossible. As a result, boat charter companies got into trouble, but the foundation of the business is solid. The great value lies not only in that they rent a certain number of boats each year and generate rental revenues, but there is also a great deal of knowledge. Dream Yacht Charter and Navigare are companies that have bases in very interesting destinations. Dream Yacht has 24% market share in the Caribbean and the Pacific, which are the most lucrative destinations. Since we are optimists, we believe the world will find its way out of the pandemic. We see the pent-up desire for travel and believe the boat charter business will rebound. As for bookings now in 2021, the numbers look very good.

The second thing is that we previously invested in Culture Trip, which runs a travel website with tips on places worth visiting. Culture Trip focuses on the travel experience. Sailing and maritime experiences make up a significant part of that. So, we see some synergies there.

Obviously, you stick to the principle of not having all your eggs in one basket…

We are diversifying quite a lot. Twenty-five countries, three continents, telecommunications, media, finance, engineering, biotechnology, e-commerce, real estate. By that I mean that both geographical and sectoral diversification is extremely important, which we all saw during the pandemic.

Has the private equity environment become more competitive in recent years?

Definitely. And this is due to the large volume of cheap money available. We see it not only in private equity as such, but also in individual businesses. We see huge valuations in biotechnology, for example. Look at the values companies that are not even conducting clinical trials have been trading at, and so on. This is a perpetual discussion: Is it a bubble, isn’t it a bubble…

What do you think? Will the bubble burst?

Undoubtedly there will be corrections, but naturally it depends on the asset class. Will it burst in the style of the early 2000s internet bubble? I don’t think so.

Is the business of finding the right investment opportunities more difficult because of the huge amount of cheap money available?

There is no easy answer to that. It needs to be applied to specific situations. As for our assets, that’s fine. When we look at what to buy, we need to think far more carefully whether the asset on its own can really cover our investment costs, generate returns and so on. That’s determined by our environment, and we must adapt.

How important it is for the globally operating Group to be present and act locally in the markets where you are present? For example, can a fund manager such as Tiger Global Management, which employs an army of analysts in Bangalore to map the whole world, snatch any potential transactions you may be looking at?

Being present in the market where you operate is a great advantage. Money isn’t made on the deals that look good at first glance, but usually on deals where you need to look a second or fifth time. When I look at an opportunity in Australia from my office in the Czech Republic, there is a risk I will miss many fundamental aspects I can’t see from abroad or as a foreigner. This means smart analysts in Bangalore are fine, but they can overlook cultural and other aspects that will dramatically affect that business in the future. It can work with stock market investments, but we can either try to be present locally on a given market to build a business there or have local partners and work together with them.

Do you think what we are experiencing in terms of rising costs, from the price for shipping containers to computer chips, is a temporary or permanent phenomenon?

I would say this is a fluctuation caused by the concurrence of several things. I am inclined to predict we are talking about a relatively short-term inflationary spike. However, I can’t say whether the low inflation levels of previous years will return completely.

Over the last few months, referencing the rise in prices, we have heard opinions that this proves that capitalism no longer works…

I even recently read an article in the Financial Times that says the same thing in reference to climate change. Capitalism doesn’t work and therefore we must find another system. That scares me.

What scares you? That someone thinks like that?

That they printed it in the Financial Times! That many people think that is a whole different matter.

Going back to your deals, at first glance it looks like you are working on a few big ones at the same time. The Air Bank and Moneta merger, the Cetin IPO, and the O2 delisting. Is it normal to shoulder so much work simultaneously?

It’s always been this way. Sometimes you see more, sometimes less, but let's just say we’re restless.

What does it look like with Moneta? Have you improved your offer?

I won’t say anything beyond what has already appeared in the media. Obviously, you understand. In any case, forming a strong digital retail bank on the Czech market is a unique opportunity. At the same time, there is no large bank in the Czech Republic owned by Czech capital at the end of the day. This is quite unique in the European context. After all, the majority of shareholders agreed with our proposal at the General Meeting. It was not the necessary 75 percent, but it is clear that a significant number of shareholders are on our side. The project continues for us, and we are looking for the right way to complete it.

Were you surprised it didn’t work the other day?

No. Respectively, we modeled possible outcomes, this was one of them, and in the end it happened.

Is this an essential deal for you?

It depends on how you define essential. For us, every transaction is essential, even if it is a few tens of millions of Czech crowns. Would it put us in danger if there was no deal? No. Do we want it and are we working hard on it? Definitely yes.

Is it a good time to sell Mall Group?

We don’t comment our decisions in some cases, and this is one of them.

Are you happy with Mall Group?

In some ways yes, and in some ways no.

You said earlier that you buy businesses that make money…

Did I really say that? We buy businesses where there is a prospect to create value, which does not necessarily mean they are making money now. After all, when we talked about sailboat charters, that’s a business not currently making money.

There has been chatter on the market that you expected Mall Group would become profitable much sooner. Is that so?

These rumors aren’t worth commenting.

Is e-commerce one area you have had to dive into more after the tragic events of March?

I was relatively close to that. On the contrary, I had to immerse myself more in finance and real estate.

What is it like when you suddenly need to know much more?

A big change. That’s why I talked about the burden of responsibility. It’s something one must respect. Every business has its laws and logic. I can’t look at it in minute detail from the beginning, so I gradually go from above and try to absorb it as effectively as possible.

Will Cetin be listed on the stock market?


Cetin in, O2 out. You don’t want to share a profitable operator with other shareholders?

Here I will say hold on and check your facts. If you add up the dividends and compensation for the separation of O2 and Cetin, we made 100% for O2 shareholders since 2014. That’s not bad, especially for a telecommunications asset. I don’t think you’ll find anything like that in Europe. The reason we are delisting O2 from the stock exchange is the ongoing decline in the trading volume of its shares, which has dropped seven-fold since 2014. By the way, the O2 stock was taken out of major stock exchange indices, including the MSCI. In other words, there is no benefit. We also believe that if we own 100% of O2, we can better utilize the synergies between individual operators, between Telenor and O2 here in the region. And it’s about sharing knowledge, people, and other things. It’s more complicated when I’m in business with other shareholders.

And what about the argument that the O2 stock delisting will make the Prague Stock Exchange even less relevant than it is now?

The guys probably won’t like me, but the Prague Stock Exchange is basically irrelevant. This is a product of the market’s size and the fact that the capital market is not widely used as a source of financing in our region. However, this is not only the case in the Czech Republic, but also Germany and many other European states.

You mentioned the word synergy, which has long been talked about in connection with the telecommunications business and the media. How exactly have you figured out what your grand plan is?

It’s not a grand plan. [Laughs, editorial note] It’s a lot of small jobs and work on a lot of things. The fact that on the one hand you can produce quality local content and on the other are retail telco clients where you can add content in other services is a great advantage. That’s from a top-level perspective.

I’ll give an example if we go into detail. At the moment, we’re relatively intensively promoting Voyo in Slovakia as an OTT platform [over-the-top, i.e., offering content to viewers directly and via the Internet, editorial note] for O2 clients. They will receive additional services, and at the same time we expect the number of clients on this platform to grow. Another example: By contrast, we can use the space and free time on television in different countries to promote our operators’ products. By the way, we’re also looking at how to buy interesting content together, because together you have much more power to buy exclusive content, such as sports. So I can’t give you a simple one-sentence answer. It’s about a series of individual steps that are being taken and will be taken.

Will PPF have a profit this year?

Of course.

So last year’s loss is a one-time fluctuation?

Yes. Anything else would be a disgrace. [Laughter, editorial note.]

Does this mean that Home Credit will rebound in China?

I suppose so. This has a lot to do with how regulation continues to evolve, as this is a major problem right after the impact of the coronavirus. If it’s not completely irrational, it will work.

Is Home Credit’s IPO completely off the table?

We never take anything off the table and never talk about our plans publicly, and if you ask me whether we’re working hard on it now, then my answer is no. But that doesn’t mean it can't happen.

Would that be the same answer for the entry of a strategic partner at Home Credit in China?

It’s always about supply and demand. It may make sense or not. As you can see, we’re quite secretive in this regard.

Was the purchase of a minority stake from Jiří Šmejc’s Emma Capital planned?

That’s how the transaction has been designed from its beginning. Of course, it’s still possible to agree otherwise, but at the moment this is how it has been agreed.

Is China becoming less legible for you?

Hard to say. Rather, I look at what is happening in the world in general, and it’s clear that globalization as we have known it is over. We always try to respond to the situation, and we will have to react flexibly here as well.

Yes, but still all those businesses posting steep growth rates and miraculous gains were possible because China opened up and applied elements of Western capitalism. And now it looks like it’s closing. Just look at the pressure Beijing exerts on technology companies to make them conduct their business as the government wants them to…

I really don’t dare to predict what will happen and how the industries we are interested in will look like. Regarding the tech companies you mention, I believe their size and entry into the financial sector may have already caused a macroeconomic problem. That’s what they are dealing with, and it may be addressing some other things, but that doesn’t necessarily mean China will close.

Is it possible to replicate the success you experienced in China or Russia, or has the window of opportunity on these markets closed?

I don’t think the window is closed. Maybe it’s smaller, maybe it looks a little different, but it’s still there.

How important is Home Credit China, the former flagship, for PPF right now?

We have gradually reduced our exposure in China. As a part of the financial services segment, we have 11% of our own capital, or equity, there so China is simply one of the countries where we operate. It doesn’t mean that Home Credit equals China.

And what about the West, will you increase your exposure there?

We’re already doing that. We bought an office campus in Atlanta. We are taking this as our first foray into the US real estate segment. Therefore, we’re looking for more acquisitions there. We are strengthening our position within Sotio in biotechnology, and as far as Škoda Transportation is concerned, we are buying a factory in Germany and another in France. The fact we are buying factories there means we are entering Western European markets. We’re boosting our westward expansion, yes.

Did it ever bother you that some called you a usurer because of Home Credit?

It’s such an oversimplification to say that everyone who provides consumer loans as a non-banking institution is a loan shark and a bad guy. We have invested a lot in changing this perception. We strive to behave quite responsibly and educate clients on how not to fall into the debt trap in all our markets. I honestly think our credit products are great. You also need to look at the alternative. If we said we’re closing it down because we’re bad guys, who’s going to replace us? Real loan sharks, which is a completely different story.

You could also have a bad reputation for those things because you’ve been completely closed for years, which gives fodder for rumors and misconceptions to spread…

It is certainly a thing that can contribute to filling the information vacuum, various slander and so on. On the other hand, I much prefer to do business, seek new projects, think about them, and talk to our people rather than having photographs taken and doing interviews. Petr Kellner was the same, and I think many other colleagues at the Group share that attitude. But it is true that at some point the perceived non-communication backfired when some information about PPF began to appear that we were no longer comfortable with. That’s when we moved toward greater openness. But I can’t say doing it makes us feel good. [Laughter, editorial note.]

And did you know everything Petr Kellner did in business?

Basically yes.

Don’t you expect someone showing up claiming that Petr Kellner had shaken hands with him or her regarding some deal?

It could have happened if he privately promised someone something small, but in business we really shared everything.

Is his absence a problem in relation to business partners who were used to dealing with him?

Everyone has some ties and Petr had a lot of them, but mostly they were doubled or tripled. But naturally my job and the job of my colleagues is to further develop these relationships.

Would you say you have a hard job?

No, I enjoy it. Hard work is when you don’t like it.

What do you enjoy most about it?

It’s the diversity. We are sitting here now dealing with the telecommunications and television businesses. On Monday, we will discuss what to do with Moneta next, and we’ll also talk about whether we’ll buy another real estate property in Bratislava. These are just illustrative examples. In any case, I mean how diverse and evolving my work is. Next week, I’ll be in Moscow and Kazakhstan where there are completely different people, completely different problems, and completely different opportunities. The mosaic is simply wonderful. And then there are our people, both at the headquarters in Evropská and in our companies. We have brought together great people who are rich sources of the energy that keeps me going every day.

If I ask differently: What doesn’t make you happy about your job, when you feel like a fish out of water?

There is another side to the coin of diversity. There is a lot to learn, many tasks to do. And one cannot go deeply in any of them because there is simply no time for it. That’s a shame because if you can move from a higher vantage point down to the full detail, you can find new value.

Will PPF still be together in thirty years?

I believe so. It very much depends on the family. At the moment, however, we have a complete accord on how to develop PPF and move it forward. Everyone sees this as the continuation of Petr’s legacy, so I would say yes. Of course, it will be completely different from the point of view of business, geography.

I was thinking from the point of view of unity, whether it wouldn’t simply fray and dissolve…

I believe it will stay together. Only I won’t be here anymore… I mean at work, working. [Laughter, editorial note.]


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