Entrepreneur Michal Strnad sold the South Bohemian engineering company Kovosvit MAS to the Russian investment fund Trust Union Fund. The price of the transaction was in the hundreds of millions of CZK. Strnad was looking for an investor for over a year. Trust owns an industrial group in a similar field in Russia. They plan on expanding Kovosvit to more markets and have already landed the company a new 15 million euros project.
Kovosvit was bought in autumn 2016 by Jaroslav Strnad. The company was then in debt. “We managed to save and stabilize the company, but the group’s synergies did not work as initially planned. Therefore, we were looking for an investor who bought the company for more than a year and had the prerequisites to develop it further. With the initial investment at my property entry into Kovosvit, “said Michal Strnad. Kovosvit is a subsidiary of Strnad’s Industry Innovation. He also owns the CSG holding.
A group of Russian industrialists owns the Trust Union Fund. According to the agreement and due to the company’s smooth takeover, the current management in Kovosvit will remain in the coming months, led by the Chairman of the Board of Directors Daniel Kurucz and the CEO Pavel Kovář. The company has 500 employees.
“We negotiated the sale of Kovosvit for several months, and we had more applicants from Germany, Poland, and Turkey. In the end, we opted for the Trust Union Fund. We chose it not only because of the agreed price conditions but also because Kovosvit will help markets where the Kovosvit brand has a historically excellent name, “said Kurucz.
A future promise is a new contract for the supply of 60 machining centers within two years worth 15 million euros.
Last year, the machine tool market worsened, and a further decline in demand was brought about by the coronavirus crisis, which fell mainly in Western Europe. “The new owner has the potential to help Kovosvit increase sales in the markets where it operates for a long time, maintains employment in the company, and even create new jobs,” said Kurucz.
Kovosvit, with 500 employees, expects revenues of around CZK 1 billion this year. According to preliminary results, Kovosvit had sales of CZK 1.19 billion and an EBITDA (before tax, depreciation, and interest burden) of CZK 64.5 million. Due to restructuring, it ended in 2018 with a consolidated loss of 100 million.
Half of Kovosvit’s sales are exports to the EU and Russia. The company has a long tradition in the production of machine tools. It was founded in 1939 by Tomáš Baťa, and it once had up to 3,000 employees. In the autumn of 2016, the industrialist Jaroslav Strnad bought a company that was in debt and failed to pay wages.