Pavol Krupa Milos Zeman

Matt Atlas

Raider Pavol Krupa Could Become The Target

In April 2016, Pavol Krúpa, a financier and co-founder of the Arca Capital Group, lectured at the University of Economics in Prague. One of his main topics was also how to make money on companies that have problems. If the students listened well, they could now try his theory on him.

Pavol Krúpa has serious financial and reputation problems. He is in danger of losing projects and being forced to sell off his assets. The phrase “karma is for free” offers itself. Problems have always been associated with Krúpa. He based his entire business career on problems. He has built a reputation as a “raider” looking for companies in trouble to profit from them. But now the tables have turned, and the hunter could become prey.

Media pressure – five years ago, Krúpa came to the university as a media star. At that time, the Czech media reported extensively on the duel of billionaires. The Slovak businessman stood in the way of the owner of OKD’s black coal mines, Zdeněk Bakala.

The mines got into trouble, and not only thousands of endangered jobs were discussed in the media, but also the company’s housing stock. The company owned approximately 44,000 flats in which hundreds of thousands of tenants lived. According to the privatization contract, the company offered them to tenants at non-market prices, which did not happen. That’s where the change of business owner came about.

Krúpa sensed the opportunity. “When we analysed the whole story, I was absolutely upset by how big the “tunnel” had been. Zdeněk Bakala’s PR tried to blame OKD’s collapse on a drop in the price of coal. But OKD did not go bankrupt because of coal prices, but because it was “tunneled” to the bone, which we showed with our activity,” Krúpa told Lidové noviny. He also claimed that he wanted to return to the Czech Republic the money that OKD had taken abroad and return the apartments to tenants – all that with the fact that he would be able to earn money by taking over the entire group and its subsequent sale.

The campaign he launched against Bakala was without a match. Krúpa hired a company specializing in organizing fake protests to demonstrate in front of Bakala’s home in America. A lawsuit filed by Bakala in U.S. courts accuses Krúpa of “harassing, defaming, and interfering with his business.” In addition to hiring paid protestors, Krupa was also behind harassing phone calls and e-mails directed at Bakala’s business and personal contacts. The Czech businessman has also accused Krúpa of trying to blackmail him for CZK 500 million Czech (approximately 19.5 million euros) to end the campaign.

Awarded by the President

Krúpa made a name for himself in the OKD case, and, among other things, he received a medal of merit from Czech President Miloš Zeman in 2018. He became media-famous in the Czech Republic in 2016. However, in Slovakia, it was much earlier.

His journey among well-known financiers led, as in the case of other entrepreneurs, through Austria. He took advantage of the fall of the regime. “My first business was such that I bought winter jackets in Austria for a few hundred after the season and sold them for two and a half thousand before the next winter,” Krúpa explained to university students at a lecture, according to Czech Hospodářské noviny.

However, he only started to do real business with his classmate from the university, Peter Krištofovič. “We obtained the first capital by arranging financial products. We have invested commissions from the sale of insurance policies in stock transactions. They were small businesses. We were just watching others buy stocks while pooling funds. And we also tried to earn something in the process,” he explained to Trend in 2008.

Together with Krištofovič, they founded the company All Finance Services in 1999, which offered insurance and mutual funds. Four years later, Arca Capital was established. “I wanted to value my money more. Banks have already known us as the owners of a large company for brokering insurance or mutual funds. They were willing to lend us funds to start in a new direction towards private equity. We have seen that we can grow alongside established financial groups,” said Krúpa.

Group growth – Arca immediately ranked among the fastest-growing companies. With Krúpa as its head, it started acquiring stakes in companies from various industries. It wasn’t alone in that. Krúpa was looking for alliances with well-known figures from Slovak business. They joined forces with, for example, Milan Fiľo (VČE Transformátory) or Zoroslav Kollár (Kúpele Trenčianske Teplice). In the Czech Republic, acquiring a 31 percent stake in Moravia Energo got the public’s attention. Arca bought them in 2007 from former Czech Prime Minister Stanislav Gross. The crisis in 2008 slowed down the start of the group, but later, Arca started up again. While in 2012, its assets amounted to 200 million euros, in 2015, it reached 500 million, and in a year, they crossed the billion euros mark. “As the numbers show, the group owners and management know very well what they are doing. The difference factor between success and failure is the ability to find an opportunity and make full use of it,” the group said.

That Arca is doing well is shown mainly by specific statistics, the group wrote in a PR article in 2017. While Arca expanded, Krúpa was basking in the media attention. “I do not convince anyone that I am a billionaire. I don’t even want it written about me. On the other hand, I have assets worth some 480 million euros, and this year we want to increase by some 100 million,” he said in an interview with MF Dnes in 2015. At that time, he also boasted that they had earned hundreds of millions of Czech crowns by buying O2 shares.

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