Autor: Michal Domonkos
Zdroj: BREJK. 3.2009, č. 3, str. 42-45

In business, he’s like a shark – he can’t stop, or he’ll start to stagnate. He likes when women use their merits in business too. Pavol Krúpa talks about his future plans and about the current crisis.
BREJK: Many projects have started to stagnate during the current financial crisis. Do you feel it as well?
PK: Everyone feels the crisis, either outright economically or psychologically, in their changed behaviour and that of society. It can be said that everyone pulled the hand brake and is waiting what future developments will bring. The proper investor is like a chameleon; he adapts to the environment and waits for new opportunities and trends, which are determined by economic developments on the market. Considering the new conditions, we re-evaluate and redesign some of our investments as well. Some projects can be done only with the help of a bank‘s funding so we wait on the opinion of banks. We can talk about stagnation here, because banks now need more time to approve a decision concerning the funding of our projects. Arca Capital had a well diversified portfolio and followed a hands-on principle, which means it had control over its projects. This was preventing speculative investing into securities, therefore the fall of stocks didn’t affect our budget. Despite the crisis we occasionally exited, or are in the final stages of exiting, some of our projects in 2008. We expect that we will use these resources for new opportunities.
BREJK: In your opinion, what was the trigger mechanism of the current deep economic crisis?
PK: The global financial crisis can be compared to an over boiled pot, into which „cooks“ like politicians, bankers and analysts added ingredients in the form of systematic overvaluing of assets and loans, exaggerated expectations of economic development, media manipulation, absence of responsibility of top managers in administering assets, and putting their own interests above the interests of society. They heated this pot with the macroeconomic policy of administrations, wasting of resources, absence of common sense, and the purposeful obscuring of information. This had to boil into inability to pay mortgages, the fall of the mortgage market, decreased stock prices of companies invested in mortgages and the subsequent influence on the other stocks of these companies. The outcome of this will be a long recession. Households, or consumers, won’t be spending their resources in the light of an uncertain future, investors will be more cautious in predicting the future and they will emphasise the real value of assets and the higher profitability of projects, and that will cause restriction of investment activities.
BREJK: Can this economic downturn have some positive effects?
PK: It definitely can- the price of assets will condense, a monetary unit will have higher value, slowed growth of the economies will be connected to a decreased inflation, which means lower prices for the consumer, or at least a damping of price increase. It’s possible to expect zero growth or even decrease of the GDP within the Euro zone. The terms between businessmen will adjust. Projects will be judged more feasibly, without excessive expectations; the practice of favouring some groups for better conditions in approving a loan will end. Banks will evaluate projects more cautiously. This is an opportunity for effective investment companies. Those companies that withstand the crisis will have guaranteed growth in two years through new investment opportunities. Currently we are only at the beginning of the crisis.
BREJK: What are the specifics of Slovakia in these times? Except for the adoption of united European currency…
PK: An impact of the crisis on the economy is expected in our region as well. Decreasing demand in EU countries and the USA will have a negative influence mainly on exporters, and therefore on a line of subcontractors in our region. An increasing unemployment rate is generally expected, as is slower increase in wages due to the pressure of cost reduction on businesses, etc.. Multiple sectors are pushed by Asian competition, strong competition in the field of small business service, and increased prudence on the part of banks providing loans. More pressure in competitiveness can start even after implementation of the Euro in the Slovak republic. The specifics of Slovakia lie in the fact that the crisis has stricken us in the best condition possible. Integration into the EU is finished, the economy has taken off after reforms, our conversion rate is fixed and the indebtedness of citizens is appropriate. For these reasons, the impact of the crisis will be less dramatic for us compared to some other countries.
BREJK: There is a wide scale of companies in your portfolio. You also started to work in the spa business, specifically in Trenčianske Teplice, but you eventually backed off from that.
Why?
PK: Arca Capital’s strategy is to invest in the basic capital of a company, with an option to influence its management, within an investment framework of 2 to 5 years. As a private equity investor we can focus on companies where restructuring, crisis management or, lets say, the restitution of a business economy are necessary. Or, we can invest in businesses where we predict a growth potential and we can utilise capable management and focus on improving the project‘s cash flow. We can say, “we are leaving this project with a clean slate.” The project in Trenčianske Teplice was the type of project that required heavy restructuring. We did our job, and when an interesting offer came along, we offered the project to another investor.
BREJK: What are your plans for the future?
PK: Currently we are focusing on opportunities brought by the financial crisis. To my understanding it’s not a crisis, but rather a straightening of conditions and a sobering up from an investment and development craze that started to rule throughout the world. We want to focus on sectors with growth potential.
BREJK: Which ones are those?
PK: We want to strengthen our position in the foodstuffs sector. We have one big acquisition planned in this field, in Slovakia. We will continue to focus on real-estate development projects of up to fifty to hundred flats, where the dominating feature will be the location and uniqueness of the project. We want to bring further investors into the Ukraine, where we have several projects in progress in the fields of logistics and retail. We want to strengthen the position of Arca Capital on the Ukrainian market and continue to utilise opportunities that the Czech and Slovak markets offer. We have a unique project in the field of hotel proprietorship and tourism in central Slovakia. It is our perception that many huge opportunities for investment emerge in the area of private equity in times of crisis.
BREJK: I’ve read somewhere,that your biggest inspirational model is Slavomír Haščák, from Penta. If that’s true, in what sense?
PK: I have many inspirers, people I learn from, or people whose behaviour I study, or those who motivate me with goals they have achieved. I admire Slavo‘s professionalism and ability to prepare for a meeting, his almost perfect precision in problem solving. I can say that he is literally able to solve every situation and have an understanding of every field. Whether it‘s law, economy, psychology. Slavo is the figurehead of Penta and creator of their strategy. And the strategy that they create in Penta is from my point of view the proper and most effective strategy of private equity investment in this region.
BREJK: When will you catch up with Penta?
PK: When it will start running towards us. We have a clearly defined strategy oriented towards small and medium businesses and we are aware of our position on the market. It’s like in nature, where, in addition to the big predators, there are also smaller ones. I would say that we are not genetically equipped to catch up with Penta, but you never know. Maybe one day, when a big investor comes along and provides us with the resources and opportunity to expand more dynamically…
BREJK: It’s said that you sketch a lot and use Chinese proverbs during meetings and interviews.
PK: I sketch in cases when I’m convinced that a visualisation of my idea will help to make clear what I want to communicate. I use stories and proverbs, not only Chinese ones, to grab people’s attention, and it helps give an understanding of what I’m saying.
BREJK: You bought a huge, 50-hectare piece of land in Kiev. Do you want to build something there as well?
PK: We purchased several properties in the vicinity of Kiev. Each was purchased for construction. We had bought two pieces of land, south of Kiev, in the direction of Odessa. One is in the picturesque valley of the Zastugna river, located 20 km from Kiev. We want to build 160 houses for the higher middle class on this land. The panorama of the valley enables the architect to utilise the unique scenery of the valley surrounded by a forest for first-grade housing. Another property is located 30 km from Kiev, directly on the main line to Odessa. We want to construct a logistics park there.
BREJK: You own several firms in the Czech Republic. Which one are you most proud of?
PK: We are proud of all our successful investments. A lot of work goes into them, and the ability to make the right decisions and the know-how of the managers, who lead and realise each given project. Czech Precision Forge (former Malá Kovárna Škody Plzeň) is worth mentioning. Here we created, from a company that was near closing, even bankruptcy, a successful engineering firm with a turnover of 24 million euro and with 250 employees. Also KASA.cz, and Marilla, which represents a distinct player in the segment of coffee and mineral water on the Czech market.
BREJK: Which one of the countries you operate in is the most „fertile“ for business?
PK: To answer in your terminology, the most fertile business is in the Czech Republic and Slovakia, because here we already harvest the fruits of our work. New markets, for example the Ukraine, are a big opportunity, where we are just ploughing and sowing. We expect the results in several months and years.
BREJK: Like most men, you surely have a hobby in fast cars…
PK: I may disappoint you, but I find that the feeling of a fast ride fulfils me only temporarily. I enjoy the feeling of endorphin release during other activities much more, for example sports. This is the reason I don’t own fast cars anymore. I have only a Range Rover and a Mitsubishi Pajero.
BREJK: I found out that your fitness is improved by the top-level trainer Maroš Molnár.
PK: Maroš is among the best sport trainers, and not just in Slovakia. The proof of this is that our Slovak hockey stars and other successful sportsmen train with him. When Maroš went to Ľubo Višňovský in Los Angeles, he instructed the team‘s trainer. He made a standard uproar with the introduction of new progressive training methods. I’m glad I can train with him and his clients and have an opportunity to work with the best- not only in business, but in sports as well. I do sports that I can dedicate myself to in every country I work in – working out, running, cycling. It’s a tradition for me to participate in the Senec triathlon.
BREJK: It is said that you made a bet for a hundred thousand with hockey player Ľubo Višňovský on who will be able to climb a selected hill in Roháče by bicycle. Who won?
PK: The bet was cancelled, though we were both well-prepared. In the week when the trip was planned, a family matter surfaced that prevented me from participating and we moved the bet to the next year.
BREJK: What do you spend most on?
PK: I think that, like every busy businessman, I spend the most on travelling and related services. Living in three countries requires having someone to take care of you. I spend the most on clothing and sports equipment. Some time ago I had an interest in expensive watches, but then I kept the sports ones (Polar), because it was uncomfortable to always change them.
BREJK: What kind of women do you like, and what determines your choice?
PK: I like women that can attract attention. Those who have a certain challenge or attractiveness in them. My choice is determined by looks accompanied by sex appeal and attitude to life and values.
BREJK: Have you ever met a women you wanted to spend the rest of your life with?
PK: Usually, when someone is beginning the relationship and he‘s in a certain phase of that beautiful craze, he’s convinced that it’s for the rest of his life. Currently I am not in that phase of a relationship.
BREJK: Can you tell us which phase are you currently in?
PK: I’m still single…
BREJK: When conducting business with women, many of them attack with their natural weapons as well, and many men will take the advantage of that. What would you do, if something like that happened to you, if it hasn‘t already?
PK: They attack, and I like it when someone utilises all of their talents and abilities, but as far as business goes I’m not an easy prey.
BREJK: How do you „heal“ yourself in the event of unsuccessful transactions?
PK: Thanks to God, our concept, and capable people in our company, there are very few unsuccessful transactions. But if something that can be called a failure arises, I’m not dealing with it by running away. I’m staying and solving the situation. I’m trying to take a lesson from such a situation and to do things better from that point.