PPF (company)
Encyclopedia
PPF is a privately held international financial group. It operates in the area of consumer financing, retail banking and insurance. It develops its activities in the Czech Republic
, Slovakia
, Russia
, Ukraine
, Kazakhstan
, Cyprus
, Belarus
, Vietnam
and China. Its headquarters is located in the Netherlands
. The largest shareholder of PPF is Petr Kellner
(94 %).
in Czechoslovakia
the government led by Marián Čalfa
decided to gradually privatize state-owned companies. The legal framework was set by Act No. 92/1991 enacted on 26 February 1991. One of the agreed privatization methods was voucher privatization
. Czechoslovak citizens who decided to take part in the voucher privatization had two options, either bid for shares in the privatized companies by themselves or exchange in advance their vouchers for shares in privatization funds, whose managers would make the investment decisions by themselves.
In September 1991 Teplice
-based company Správa prvního privatizačního fondu (literally Management of the First Privatization Fund) was founded, its registered capital was only CSK
0.1 million (USD 3.3 thousand). Petr Kellner
became its chairman, other board members were managing director Milan Vinkler and Petr Joudal.
All of them were already entrepreneurs. In February 1991 Kellner founded company ANO with Joudal and company WIKA with Vinkler.
To succeed in the privatization, PPF needed money for an advertising campaign
. It obtained the capital from state-owned glassworks Sklo Union, which was also based in Teplice. Štěpán Popovič, board member of Sklo Union, formally introduced Kellner to the board, which in turn approved a CSK 20 million investment in the form of capital increase and debt financing. In November 1991 registered capital of PPF was increased to CSK 6.6 million (USD 226 thousand) and Joudal was replaced by Jaroslav Přerost, who was at the time CFO of Sklo Union.
In December 1991 PPF set up five privatization funds:
Registered capital of each fund was CSK 0.1 million. PPF did not establish any fund focused on Slovakia
.
In March 1992 registered name of the management company was shortened to První privatizační fond (First Privatization Fund), a month later extraordinary general meeting elected Popovič to its board.
The advertising campaign was successful. In the first wave of voucher privatization PPF funds obtained 1.4 % of all privatization points and PPF became eleventh most successful management company. In the second wave that took place after dissolution of Czechoslovakia
PPF funds acquired 2.1 % of all privatization points (ninth most successful group).
In 1994 shareholders of the four largest funds from the first wave agreed a merger, the smallest Regional Investment Fund was later liquidated. In 1996 the merged fund acquired 20 % stake in Česká pojišťovna (ČP), the largest Czech insurance company. ČP had a profitable insurance business, however its two subsidiary banks were losing billions of Czech crowns, decreasing the ownership equity of ČP.
On 17 June 1996 the first wave fund was transformed to a standard holding corporation (PPF IH). The transformation took place just two weeks before 1 July 1996, when the Act No. 142/1996 made the transition to a standard corporation much more complicated. As a result, PPF IH was not subject to regulation of investment funds anymore. To push the transformation through, PPF used cross-shareholdings. For example, industrial company TMP where PPF was the largest shareholder acquired in March 1996 shares of the fund, only to sell them for a lower price after the extraordinary general meeting losing CZK 96 million.
On 19 June 1996 the Minister of Finance Ivan Kočárník hosted a key meeting of ČP shareholders (NPF, PPF, IPB, ČSOB
and KB
). National Property Fund (30 % stake) was represented by Minister of Privatization Roman Češka (ODA
), governor of the Czech National Bank Josef Tošovský
was also present. It was agreed that PPF should manage ČP and IPB its ailing subsidiary banks. PPF and IPB also got an option to purchase ČSOB shares, subject to condition that audited ČP profit for calendar year 1997 is positive. In 1998 PPF and IPB exercised the option and the state lost majority in ČP (the state was the largest shareholder of ČSOB and KB).
On 21 March 2000, Libor Procházka (IPB) agreed with Petr Kellner to sell ČP shares controlled by IPB to Dutch-based company CESPO. The contractual penalty amounted to 75 % of the purchase price (CZK 1.6 billion). IPB transferred the shares too late and therefore CESPO paid only 25 % of the agreed price. As a result, PPF had a majority interest in ČP. IPB went into forced administration in June 2000 and was sold to ČSOB. ČSOB later took PPF to the court, claiming the price of ČP shares was too low, however it lost the case.
In September 2000 registered capital of PPF IH was decreased by 90 % and CZK 1767 million was distributed amonth its shareholders (CZK 500 per share, meaning CZK 15000 per voucher book).
Czech Republic
The Czech Republic is a landlocked country in Central Europe. The country is bordered by Poland to the northeast, Slovakia to the east, Austria to the south, and Germany to the west and northwest....
, Slovakia
Slovakia
The Slovak Republic is a landlocked state in Central Europe. It has a population of over five million and an area of about . Slovakia is bordered by the Czech Republic and Austria to the west, Poland to the north, Ukraine to the east and Hungary to the south...
, Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, Ukraine
Ukraine
Ukraine is a country in Eastern Europe. It has an area of 603,628 km², making it the second largest contiguous country on the European continent, after Russia...
, Kazakhstan
Kazakhstan
Kazakhstan , officially the Republic of Kazakhstan, is a transcontinental country in Central Asia and Eastern Europe. Ranked as the ninth largest country in the world, it is also the world's largest landlocked country; its territory of is greater than Western Europe...
, Cyprus
Cyprus
Cyprus , officially the Republic of Cyprus , is a Eurasian island country, member of the European Union, in the Eastern Mediterranean, east of Greece, south of Turkey, west of Syria and north of Egypt. It is the third largest island in the Mediterranean Sea.The earliest known human activity on the...
, Belarus
Belarus
Belarus , officially the Republic of Belarus, is a landlocked country in Eastern Europe, bordered clockwise by Russia to the northeast, Ukraine to the south, Poland to the west, and Lithuania and Latvia to the northwest. Its capital is Minsk; other major cities include Brest, Grodno , Gomel ,...
, Vietnam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
and China. Its headquarters is located in the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
. The largest shareholder of PPF is Petr Kellner
Petr Kellner
Petr Kellner is a Czech businessman. He is estimated to have a net worth of US$ 9.2 billion according to Forbes' latest annual list of billionaires, making him the wealthiest man in the Czech Republic. However, Czech economic media estimates are considerably lower, CZK 60 – 75 billion...
(94 %).
History
History of PPF dates back to the early 1990s. After the Velvet RevolutionVelvet Revolution
The Velvet Revolution or Gentle Revolution was a non-violent revolution in Czechoslovakia that took place from November 17 – December 29, 1989...
in Czechoslovakia
Czechoslovakia
Czechoslovakia or Czecho-Slovakia was a sovereign state in Central Europe which existed from October 1918, when it declared its independence from the Austro-Hungarian Empire, until 1992...
the government led by Marián Čalfa
Marián Calfa
Marián Čalfa was a Prime Minister of Czechoslovakia during and after the Velvet Revolution, as well as acting President for 19 days, and was a key facilitator of smooth power transfer from the Communists to a new democratic representation.An ethnic Slovak, he was a member of KSČ, the Communist...
decided to gradually privatize state-owned companies. The legal framework was set by Act No. 92/1991 enacted on 26 February 1991. One of the agreed privatization methods was voucher privatization
Voucher privatization
Voucher privatization is a privatization method where citizens are given or can inexpensively buy a book of vouchers that represent potential shares in any state-owned company...
. Czechoslovak citizens who decided to take part in the voucher privatization had two options, either bid for shares in the privatized companies by themselves or exchange in advance their vouchers for shares in privatization funds, whose managers would make the investment decisions by themselves.
In September 1991 Teplice
Teplice
Teplice , Teplice-Šanov until 1948 is a town in the Czech Republic, the capital of the Teplice District in the Ústí nad Labem Region. It is the state's second largest spa town ....
-based company Správa prvního privatizačního fondu (literally Management of the First Privatization Fund) was founded, its registered capital was only CSK
Czechoslovak koruna
The Czechoslovak koruna was the currency of Czechoslovakia from April 10, 1919 to March 14, 1939 and from November 1, 1945 to February 7, 1993...
0.1 million (USD 3.3 thousand). Petr Kellner
Petr Kellner
Petr Kellner is a Czech businessman. He is estimated to have a net worth of US$ 9.2 billion according to Forbes' latest annual list of billionaires, making him the wealthiest man in the Czech Republic. However, Czech economic media estimates are considerably lower, CZK 60 – 75 billion...
became its chairman, other board members were managing director Milan Vinkler and Petr Joudal.
All of them were already entrepreneurs. In February 1991 Kellner founded company ANO with Joudal and company WIKA with Vinkler.
To succeed in the privatization, PPF needed money for an advertising campaign
Advertising campaign
An advertising campaign is a series of advertisement messages that share a single idea and theme which make up an integrated marketing communication...
. It obtained the capital from state-owned glassworks Sklo Union, which was also based in Teplice. Štěpán Popovič, board member of Sklo Union, formally introduced Kellner to the board, which in turn approved a CSK 20 million investment in the form of capital increase and debt financing. In November 1991 registered capital of PPF was increased to CSK 6.6 million (USD 226 thousand) and Joudal was replaced by Jaroslav Přerost, who was at the time CFO of Sklo Union.
In December 1991 PPF set up five privatization funds:
| Name of the fund | Registered office Registered office Registered office is a term used to describe the address which is registered with the government registrar as the official address of a company, an association or any other legal entity. Generally it will form part of the public record... | Board members (chairman first) |
|---|---|---|
| First Bohemian Privatization Fund | Teplice | Přemysl Voráč, Petr Joudal, Ladislav Bartoníček |
| First Moravian-Silesian Privatization Fund | Zlín Zlín Zlín , from 1949 to 1989 Gottwaldov , is a city in the Zlín Region, southeastern Moravia, Czech Republic, on the Dřevnice River. The development of the modern city is closely connected to the Bata Shoes company... |
Petr Kellner, Radomír Zbožínek, Jiří Cajthaml |
| First North-Bohemian Privatization Fund | Teplice | Petr Kellner, Milan Vinkler, Vladimír Klebsa |
| First South-Bohemian Privatization Fund | České Budějovice Ceské Budejovice České Budějovice is a city in the Czech Republic. It is the largest city in the South Bohemian Region and is the political and commercial capital of the region and centre of the Roman Catholic Diocese of České Budějovice and of the University of South Bohemia and the Academy of Sciences... |
Vladimír Sochor, Radomír Zbožínek, Milan Skoumal |
| Regional Investment Fund | Liberec Liberec Liberec is a city in the Czech Republic. Located on the Lusatian Neisse and surrounded by the Jizera Mountains and Ještěd-Kozákov Ridge, it is the fifth-largest city in the Czech Republic.... |
Jiří Drda, Ladislav Bartoníček, Milan Vinkler |
Registered capital of each fund was CSK 0.1 million. PPF did not establish any fund focused on Slovakia
Slovakia
The Slovak Republic is a landlocked state in Central Europe. It has a population of over five million and an area of about . Slovakia is bordered by the Czech Republic and Austria to the west, Poland to the north, Ukraine to the east and Hungary to the south...
.
In March 1992 registered name of the management company was shortened to První privatizační fond (First Privatization Fund), a month later extraordinary general meeting elected Popovič to its board.
The advertising campaign was successful. In the first wave of voucher privatization PPF funds obtained 1.4 % of all privatization points and PPF became eleventh most successful management company. In the second wave that took place after dissolution of Czechoslovakia
Dissolution of Czechoslovakia
The dissolution of Czechoslovakia, which took effect on 1 January 1993, was an event that saw the self-determined separation of the federal state of Czechoslovakia. The Czech Republic and Slovakia, entities which had arisen in 1969 within the framework of Czechoslovak federalisation, became...
PPF funds acquired 2.1 % of all privatization points (ninth most successful group).
In 1994 shareholders of the four largest funds from the first wave agreed a merger, the smallest Regional Investment Fund was later liquidated. In 1996 the merged fund acquired 20 % stake in Česká pojišťovna (ČP), the largest Czech insurance company. ČP had a profitable insurance business, however its two subsidiary banks were losing billions of Czech crowns, decreasing the ownership equity of ČP.
On 17 June 1996 the first wave fund was transformed to a standard holding corporation (PPF IH). The transformation took place just two weeks before 1 July 1996, when the Act No. 142/1996 made the transition to a standard corporation much more complicated. As a result, PPF IH was not subject to regulation of investment funds anymore. To push the transformation through, PPF used cross-shareholdings. For example, industrial company TMP where PPF was the largest shareholder acquired in March 1996 shares of the fund, only to sell them for a lower price after the extraordinary general meeting losing CZK 96 million.
On 19 June 1996 the Minister of Finance Ivan Kočárník hosted a key meeting of ČP shareholders (NPF, PPF, IPB, ČSOB
Ceskoslovenská obchodní banka
Československá obchodní banka, a.s. is a commercial bank which operates in Czech Republic. It is one of the largest bank domiciled in the Czech Republic. As a universal bank, it offers a full range of banking services to individuals and companies...
and KB
Komercní banka
Komerční banka is one of the main banks in the Czech Republic. It serves about 1.5 million customers in more than 350 branches.The bank was founded in 1990 following separation of commercial activities from the former Státní banka československá . In 1992, the bank was partially privatized in...
). National Property Fund (30 % stake) was represented by Minister of Privatization Roman Češka (ODA
Civic Democratic Alliance
The Civic Democratic Alliance was a small liberal centre-right political party in the Czech Republic, functional between years 1989 and 2007.-History:...
), governor of the Czech National Bank Josef Tošovský
Josef Tošovský
Josef Tošovský is a Czech economist and was governor of Czech National Bank from 1993 to 2000. From 16 December 1997 to 17 July 1998 he was the Prime Minister of the Czech Republic in a caretaker government.Tošovský graduated from the University of Economics, Prague...
was also present. It was agreed that PPF should manage ČP and IPB its ailing subsidiary banks. PPF and IPB also got an option to purchase ČSOB shares, subject to condition that audited ČP profit for calendar year 1997 is positive. In 1998 PPF and IPB exercised the option and the state lost majority in ČP (the state was the largest shareholder of ČSOB and KB).
On 21 March 2000, Libor Procházka (IPB) agreed with Petr Kellner to sell ČP shares controlled by IPB to Dutch-based company CESPO. The contractual penalty amounted to 75 % of the purchase price (CZK 1.6 billion). IPB transferred the shares too late and therefore CESPO paid only 25 % of the agreed price. As a result, PPF had a majority interest in ČP. IPB went into forced administration in June 2000 and was sold to ČSOB. ČSOB later took PPF to the court, claiming the price of ČP shares was too low, however it lost the case.
In September 2000 registered capital of PPF IH was decreased by 90 % and CZK 1767 million was distributed amonth its shareholders (CZK 500 per share, meaning CZK 15000 per voucher book).