Kellner’s Death: The Beginning of the End of an Era
Although some sources claim that Kellner did not leave a will, his widow Renata would have inherited most of his wealth and the 98.93% he held in PPF. However, the terms of long-term succession for the company remain unclear.
For now, the PPF the senior management will hold the fort. Ladislav Bartonicek, one of the company’s two (very) minority shareholders, responded to the crash, and analysts expect the team on site, made up of around seven key lieutenants, to respond to the crash. maintain proper operation for the time being.
“There were seven people around Kellner who basically ran the whole show: the two shareholders plus five others,” says a former PPF executive who worked alongside Kellner and has contacts within the company. “These people will form the new leadership.”
The immediate challenges are clear. Home Credit, the consumer credit business that has generated the greatest share of profitability in recent years, has been battered by the pandemic, reporting a loss of 15.3 billion crowns (584 million euros ) in 2020. This has helped drive down the value of PPF’s assets. , reducing them from 5 billion euros to 44 billion euros at the end of June 2020.
Kellner’s strategy to continue to expand PPF also meant that his death left deals open to be reached, in particular the offer to merge the group’s Czech banking assets with Moneta Money Bank, which is fully listed on the Stock Exchange. Prague, to create the third largest country in the country. Bank.
CFO of PPF, Katerina Jiraskova, was recently quoted as saying that “the boss would not” want the group to abandon the deal, and said she hopes Moneta shareholders will give her the green light in the coming weeks.
However, it is widely accepted that new blood will be needed in the longer term. Kellner’s experience navigating EEC’s unique business environment, where high-level politics play a crucial role, has resulted in him remaining the key strategist and visionary for the company.
Bartonicek is not seen as a man of ideas, rather as a firm hand on the helm, and even he admits that a figurehead will have to be found in the years to come.
Many inside and outside the upper echelons of the group believe that Daniel Kretinsky (see sidebar), a business partner of Kellner and in relation to the daughter of the late billionaire, will come to lead the parts of the company that need more “visionary leadership”. », Says the former head of PPF.
“Five years later, Kretinsky will probably take care of everything,” the source adds.
Kellner will be a difficult act to follow. He was clearly a highly skilled political operator, even managing to strike some sort of deal with Babis – notorious for his aggressive tactics towards fellow oligarchs – after taking office as prime minister in 2017.
The relationship between the pair was mutually cold, according to Frantisek Dostalek, head of the supervisory board of PPF. However, PPF still managed to win a hotly contested tender launched by the Babis government to operate a road toll system.
Kretinsky has partnered closely with Kellner in building EPH, the energy holding company that still forms the cornerstone of the former’s fortune, and co-owns retail and tech companies with PPF. Like Kellner, he has operated extensively in areas subject to strict state regulation, where working in political circles is vital.
Such experience is a minimum requirement if someone is to keep PPF together or even take it forward. Specifically, someone will need to look after the group’s strategic assets in Russia and China, where high-level political contacts are vital to prosper and, most importantly, to prevent expropriations.
“In these countries, business depends heavily on personal relationships,” said a source close to the company. It is also linked to political environments ruled by autocratic regimes, making regulation and the rule of law less reliable.
Favorite son (-in-law)?
PPF managers may be able to keep the ship stable for now, but the empire will soon have to find someone to take on Kellner’s role as a visionary, strategic leader, political cog oiler, or as you will want to call it. Most of the money is on Daniel Kretinsky.
The 45-year-old lawyer, who started out in the tightly-controlled Slovakia-controlled J&T investment group, partnered with Kellner to build energy group EPH, before buying out PPF in 2014. Kretinsky has since climbed in the ranks of the oligarchs, diversify its investments across countries and sectors. In 2020, Forbes ranked him the third richest man in Czechia, his assets of 78 billion crowns (3 billion euros) even putting him ahead of Prime Minister Andrej Babis.
Via EC Investments – which he jointly owns with J&T co-founder Patrik Tkac – Kretinsky remains a partner of PPF in retail and tech companies. Like Kellner, he clearly has political influence in Prague. He is also almost family, being in a relationship with the daughter of the deceased businessman, Anna.
However, a source with links to PPF suggests that things may not be that simple. It appears Kellner was not happy with his 25-year-old daughter’s relationship with a man 20 years her senior. Kretinsky is also apparently in debt to PPF, which could complicate any potential leadership role.
At the same time, Kretinsky would likely need to learn some new tricks to add to his MO of looking for depressed assets if he were to become PPF’s figurehead. The core of its current empire is EPH’s stock of coal-based energy companies, with the bet that during the energy transition, European governments will pay it to keep this production capacity under wraps as a safeguard for renewable energy. PPF is opportunistic, but does not take such regulatory risk, preferring to buy underperforming assets that it then manages well in order to take advantage of increased value.
While he obviously learned to expertly navigate the Czech political scene, Kretinsky will likely find the transfer of those skills to Russia and China a challenge. Kellner used his experience gained in the Czech Republic’s post-communist political system to penetrate these similar markets to the east. In contrast, Kretinsky headed west to expand its portfolio, focusing in particular on the UK and Germany.
His reluctance to talk about his UK acquisitions has somehow convinced the British press that Kretinsky is known as the “Czech sphinx”. However, he is a much more accessible character than Kellner and gives regular interviews at home. He’s also more likely to engage in standard oligarch tropes – for example, he’s the owner and chairman of Sparta Prague, one of the Czech Republic’s two football giants. He also joined the jockey for the newspapers, all of which are now owned by oligarchs seeking political power. Kellner was not tempted, apparently viewing them as relics of the past.
Retailers grappling with the challenges of the 21st century have been at the center of Kretinsky’s push west, via Vesa Equity, another partnership with Tkac. Stakes were bought in big names such as Macy’s and Foot Locker in the United States, the French supermarket chain Casino and the Royal Mail and Sainsbury’s supermarket chain in the United Kingdom.
Some of those bets have paid off – Royal Mail has emerged as a winner during the pandemic amid the boom in online shopping. But the strategy has not always gone smoothly. An offer to take over the German cash and carry operator Metro in a $ 6 billion deal was blocked in 2019 and shareholders continue to oppose the effort, which they now consider hostile. And an attempt to buy control of The world, France’s official newspaper, embarrassedly sank amid warnings from the newspaper’s journalists that they saw the Czech oligarch as a threat to editorial independence.
Even at home, Kretinsky’s control is far from certain. Illustrating all he has to learn, he was trained in the art of tuning by Kellner in 2017 when PPF put him aside at the last minute to purchase the coveted Skoda Transportation.