22 February 2018 | Hospodářské noviny | Petr Lukáč
THE TYCOON WANTS TO BUY POWER STATIONS
Billionaires in the Czech Republic are running against the stream: they are increasingly betting on the transition to green energy taking longer than the EU countries have planned. In particular, Daniel Křetínský and his Energetický a průmyslový holding (EPH) has thus been buying old gas and coal-fired power stations in Europe for several years. Now, his long-standing rival, Pavel Tykač, is also poised to go shopping; he wants to spend up to tens of billions of Czech crowns, largely on power stations.
“Although we are miners, we believe that the end of conventional sources is inevitable. But it will be slower to happen than politicians have planned. Companies sometimes sell assets simply because their government has signed a treaty/agreement. But at the same time, the need for these capacities will continue. This is the opportunity,” says Pavel Tykač, one of the wealthiest Czechs and the owner of coal mines in the north of the country and the Chvaletice power station.
According to him, coal is no longer popular, and because of politicians’ wishes, a lot of companies are focusing primarily on renewable energy sources while divesting of their power stations, both old and modernised. These capacities are therefore often available for very good money. And so, although as late as last summer Pavel Tykač dismissed all suggestions of expansion plans, now he says that “the right time has come” together with chances to acquire attractive energy assets.
Three reinforcements from ČEZ
Pavel Tykač cites Sweden-based Vattenfall’s power stations and mines in Germany as a typical example. The company was selling them under pressure from its home country’s government last year, seeking to get rid of them at any cost. “Similar issues are now also being addressed in France and other European countries.”
In the end, Mr Křetínský pipped Pavel Tykač’s company exactly for Vattenfall. EPH paid the equivalent of CZK 780 million. It was value for money, given the assets acquired.
This defeat, combined with his failed attempts at buying the Počerady power station from ČEZ or Plzeň-based Prazdroj, for which he bid together with the wealthiest Czech, Petr Kellner, prompted Pavel Tykač to change the strategy. Now, he will not purchase just in response to a currently existing opportunity; he wants to have specialists who will purposefully seek out investment opportunities. He has already enlisted the help of three renowned names and included them in his group. “We have put together a remarkable team of people,” boasts Pavel Tykač. Alan Svoboda, in the past on the Board and Sales Director of ČEZ, will manage the team. “The other key people are Michal Skalka who, for all practical purposes, developed trading at ČEZ, and Jan Žižka who was responsible for the technical condition of power stations at ČEZ for the past ten years,” Pavel Tykač specifies.
From old power stations to smart grids
The ČEZ ex-managers have a generous budget for acquisitions. Thanks to the failed attempts mentioned above, the group has more than twenty billion Czech crowns ready in cash. Combined with bank loans, the sum can be much higher.
For the time being, Pavel Tykač is rather reluctant to discuss their transactions in the pipeline. He only says that there is “more than one such case”. The range will be broad. The basis is to target larger conventional power stations mostly in Western Europe. And these investments will not be for the short term. Even if, for example, the service life of a coal-fired capacity is limited in time the company is ready to modernise or retrofit the power station for a different fuel.
Pavel Tykač also plans to invest in new technology. “We want to go where we see our added value. I don’t think that we will buy a wind farms, for we no longer have anything to bring to them. But we are looking at, for example, some hydroelectric power stations,” he says noting that electricity distribution, supply to final customers or investments in smart grids can be involved.
While these modern technologies are trendy, in the case of conventional power stations against-the-stream investors may face, for example, a complete coal ban that some governments are considering.
Nuclear is also “dangerous”; this is the hands-on experience of owners of nuclear power plants in Germany—they had to close down some of them overnight in the wake of the Fukushima disaster.
Although we are miners, we believe that the end of conventional sources is inevitable. But it will be slower to happen than politicians have planned. Tycoon Pavel Tykač
We want to go where we see our added value. I don’t think that we will buy a wind farms, for we no longer have anything to bring to them. But we are looking at, for example, some hydroelectric power stations. Pavel Tykač