Czech Investment Landscape: Domestic Investors Dominate Mergers and Acquisitions Amidst Foreign Market Decline

Although there are not many foreign investors on the domestic market with companies, there are, on the other hand, a surplus of domestic investors who are interested in investing in companies. The market for medium-sized and smaller companies is particularly busy.

“When we look at the statistics, 80 percent of our sales were to Czech investors,” the head of the consulting firm’s trade department told SZ Byznys. KMPG Czech Republic Igor Mesenský.

“About 60 percent of transactions have a local buyer. Such local customers are usually companies that are very successful in their field and have a strong position on the market,” Marek Rehberger, executive director of the consulting company Patria Corporate Finance, confirmed the move.

An example of Czech capital activity is the change this year of the owner of the company Block from Valašské Meziříčí, focusing on the construction of laboratories and operating rooms. From the investment group BHM the group of the company he bought Central European Business Partners Czech Fund.

The investment group R2G, which manages the capital of billionaires Oldřich Šlemr, Pavel Baudiš and Eduard Kučera, is also looking at the market. In the past year, she made a name for herself when she helped the large international investor CVC and the Emma Capital group of Jiří Šmejc accept it group Package and by the domestic Post Office.

“Despite geopolitical and other risks, we see interesting investment opportunities both in the Czech Republic and abroad. R2G, as a family investment company that focuses primarily on small investments in partnership with other investors or other successful family business owners, is currently negotiating a number of transactions that ‘could be,’ said R2G investment director Jakub Dyba.

Investors focused on medium-sized and smaller companies with sales of up to half a billion crowns are also on a buying spree.

“We would like to grow not only organically, but also through acquisition. We are currently negotiating with five companies, and one of us is even exclusive. We would like to complete the acquisition this year,” said Lubomír Červeňák from the SkyLimit Industry fund focused on investments in engineering companies.

The market for mergers and acquisitions is currently very busy in the ranks of medium-sized and small companies.

“In the category of transactions up to 115 million crowns, not many transactions are published. Based on the development of the number of known requests, transactions we implemented and market share, we can confirm a two-fold increase in business on the Czech market,” said the director of trade consulting at ‘ consulting company RSM Lenka Zdražilová.

Despite the dominance of Czech investors, foreign buyers have not completely disappeared. In addition to CVC’s major involvement in the construction of Packety, foreign hands have recently acquired, for example, a manufacturer of co-generation units Tedom. The Japanese company Yanmar Group became the new owner. Ostrava steel plant Steel Vítkovice again recently took over Jindal Steel Group of India. Nevertheless, foreign buyers are still in the minority in the mergers and acquisitions market.

“For foreign investors to return, the Czech economy must be interesting to them. Before that, we were attractive to them because the gross domestic product in Central and Eastern Europe grew faster than in the West, and several industries were still waiting for consolidation. This is no longer the case today. Although, of course, we have several attractive investment targets here, overall the attractiveness of the Czech Republic is decreasing,” said Mesenský from KPMG.

“We expect Czech investors to dominate foreign investors in the future. In our opinion, this is largely due to the fact that those foreign investors who wanted to be on the market in the Czech Republic are already here. Another factor is that foreign investors prefer to focus on larger markets, such as Poland or Romania, where they have a much greater chance of success,” said Rehberger from Patria Corporate Finance.

The combination of investors in the mergers and acquisitions market is similar to the business with commercial buildings such as offices or shopping centers or hotels. Also in this area right now they have control Czech Investors.