PPF Group NV is seeking out acquisitions in Europe as the investment company controlled by the Czech billionaire Kellner family expects asset prices to come under more pressure amid rising interest rates.
(Bloomberg) — PPF Group NV is seeking out acquisitions in Europe as the investment company controlled by the Czech billionaire Kellner family expects asset prices to come under more pressure amid rising interest rates.
PPF’s most recent large deals involved buying into publicly traded companies as stock market prices have dropped more than privately-held assets, according to Chief Executive Officer Jiri Smejc. Valuations in general “still don’t fully reflect the state of economies” and many businesses are finding it more difficult and costly to refinance debt as borrowing costs climb, he said.
“We think this will become more visible this year and next,” Smejc told a group of reporters at the company’s headquarters in Prague. “It would be surprising if asset prices didn’t decline further.”
The Kellner family, which has a net worth of $12.7 billion according to the Bloomberg Billionaire Index, last year picked Smejc to run the group that has about 40 billion euros ($43.7 billion) in assets. Before that, he was a long-time investment partner of PPF’s founder Petr Kellner, who died in a helicopter crash in 2021.
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Smejc is now overseeing a shift in PPF’s focus back to western markets, following years of expansion in Asia. The company’s four key areas for growth are telecommunications, media, financial services and e-commerce, although the group’s portfolio also includes real estate and engineering.
In his biggest acquisition as the head of PPF, the company last month said it was buying 15% of InPost SA, an operator of self-service delivery lockers for online retailers. It also has the option to purchase a further 15%, which would bring the value of the entire deal to about 1.5 billion euros, according to Bloomberg calculations.
While InPost dominates on its home market in Poland, PPF expects that it will be able to deliver similar growth in western Europe, especially in the UK and France. Smejc said he agrees with InPost’s strategy to focus on building a strong position in a few selected markets.
“It’s also a bet on the automated parcel machines becoming the right form of the delivery in the future,” said Smejc. “We like online infrastructure. You benefit from growth in e-commerce, and at the same time it’s also physical infrastructure, which is more difficult to disrupt for new competition than an online market place itself.”
More opportunities can be found in Europe’s television industry, said Smejc, whose group has built a 15% stake in German broadcaster ProSiebenSat.1 Media SE. PPF already controls one of Europe’s largest television broadcasters, Central European Media Enterprises Ltd.
“The prevailing view was that linear television will die, and that’s probably correct,” he said. “But we think the pace of this demise won’t be as fast as most people are expecting.”
As part of the shift away from Asia, PPF’s consumer finance division, Home Credit Group BV, last year agreed to sell its Philippine and Indonesian businesses in several deals worth about €615 million.
Home Credit’s units in India and Vietnam are “quite profitable” but have encountered similar competitive disadvantages, which prompted it to seek partners with banking licenses to get cheaper funding via deposits. In India alone, access to the average price of funding from deposits would boost profit from Home Credit’s portfolio by about 5%, or €25 million a year, according to Smejc.
“It means that this still makes sense to a lot of players,” he said. “I don’t think it will be a problem to eventually find someone.”
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