‘Francophile’ Kretinsky shocks Paris by bagging Casino group

Paris/Prague — In May, Czech billionaire Daniel Kretinsky was invited by the French government to the annual “Choose France” summit with top corporate executives.

Just more than two months later, the 48-year-old sent shockwaves through the country’s close-knit business elite by winning a tight race for control of debt-laden supermarket group Casino.

Kretinsky, who Forbes says has a net worth of $9.5bn, is a self-professed lover of France who learned to speak the language by binge-watching Francois Truffauts The Last Metro.

“He’s decided to accelerate this development in France, which is all the more interesting for him as he’s a francophone and a Francophile,” said Denis Olivennes, Kretinsky’s right-hand man in France. “He’s combining business with pleasure.”

On Thursday, Casino said that it had finalised a binding lock-up agreement to restructure its debt with creditors led by Kretinsky, to avert bankruptcy.

Kretinsky, who made his fortune in the energy sector with a string of high-stakes purchases and now owns a house near the Élysée Palace in Paris, is also in talks to become the biggest shareholder in French IT consulting firm Atos.

His French shopping spree follows a string of investments in Britain, where Kretinsky has made bets on supermarket Sainsbury, soccer club West Ham and the Royal Mail. And in September, two people with knowledge of the matter told Reuters that Germany’s Thyssenkrupp was in advanced talks to sell up to 50% of its steel division to Kretinsky.

But Kretinsky has also encountered obstacles along the way. In 2019 he fell short of fully taking over German wholesaler Metro, although his bid made him its top investor with nearly 46% of the shares, according to LSEG data.

He is also facing political headwinds in his quest to buy Atos’ legacy operations in France and failed to win the auction for German utility Steag earlier in 2023, sources with knowledge of the situation said.

Kretinsky, who at the business dinner in May sat alongside Brigitte Macron, wife of French President Emmanuel Macron, first set foot in France as a teenager in the summer of 1990. Nine years later, as a freshly graduated lawyer, he got his first job at Czech-Slovak investment group J&T.

From a starting salary of €800 a month, Kretinsky built his fortune buying coal and power plants that European utilities were selling to improve their green credentials. His EPH business is Europe’s largest privately held power utility by production with 14.4GW capacity in nine countries, from coal to nuclear and gas to renewables.

“He ended up making a lot of money on assets he bought on the cheap,” said a senior source close to French utility Engie.

The 2016 takeover of Vattenfall’s German mines and 8,000MW coal power plants is one example, where Kretinsky received €1.7bn in cash to buy the assets and the Swedish group booked a large loss on the deal. Kretinsky showed his negotiating skills in striking the deal, one Czech energy market veteran said, by getting all stakeholders on board, including the unions.

Another market player, Czech investor Michal Snobr, said the basic principle for Kretinsky is simple. “Buy it, immediately leverage it and it all grew fast amid low interest rates,” said Snobr, who specialises in energy markets and worked with Kretinsky in the early 2000s at J&T.

Kretinsky, who is known by his associates for working very long hours when needed, had “great foresight, courage, and the ability to go totally to the edge”, he said.

Other associates said Kretinsky immerses himself in the operational details of businesses he invests in. “Sometimes he may know a target company better than its own CFO,” said Igor Mesensky, a partner in charge of transactions at KPMG Czech Republic, who has advised Kretinsky.

Companies under Kretinsky’s control or joint control had core operating profits of more than €9bn  in 2022 and assets of more than €80bn, an EPH spokesperson said. EPH reported earnings before interest, tax, depreciation and amortisation (ebitda) of €4.3bn for 2022.

Kretinsky’s Prague-based holding firm employs about 250 people, with only a small plaque to signal its presence on the appropriately named boulevard-style Paris Street. It is run by a loyal inner circle of managers, some with small equity stakes.

Although Kretinsky’s recent bets in France may prove tough, the relatively small outlay may make it worth the risk. “We’re talking about €1.2bn for Casino ... that’s nothing at all,” the source close to Engie said, referring to the equity investment put on the table by the Kretinsky camp.

Some investment bankers say the same goes for Atos, stressing that Kretinsky is particularly good at squeezing the best terms in deals where he ends up as the only credible buyer.

“He’s very, very tough,” said an investment banker who has dealt with him. “His trademark is making deals in extremely difficult conditions.”

Reuters