Real estate tycoon Radovan Vítek has a long-standing reputation as a businessman with sharp elbows who does not miss any opportunity to increase his wealth. In recent years, however, he himself has had to repeatedly face attacks on his CPI Property Group. Either from former business partners, or from some investors in the holding’s securities. CPI is one of the largest real estate groups in Central and Eastern Europe.
Currently, a group of one of the richest Czechs has come under fire from the American investment firm Muddy Waters, speculating on a drop in stock and bond prices. Also in the case of CPI, Muddy Waters admits that its goal is to make money by depressing the value of CPI’s securities.
“We came to the conclusion that the majority shareholder Radovan Vítek is brazenly looting the company, while significantly overestimating the value of its assets. CPI’s management is a farce,” Muddy Waters wrote in a report released this week.
The American “invaders” also expressed doubts about the correctness of the accounting in the CPI. As an example of special operations in the holding, they cited transactions with land in Prague-Vysočany and in Řitka in Central Bohemia. They also focused on transactions with Vítka’s luxury yachts.
“We believe that Muddy Waters’ claims regarding CPI are categorically wrong,” Vítka’s group responded in a short press release early Tuesday evening.
CPI Property Group financial results for the first half of 2023:
|1st semester 2023
|1st semester 2022
|Profit before interest, taxes and depreciation (EBITDA, in millions of euros)
|Net income from real estate rental (in millions of euros)
|Value of real estate portfolio (in billion euros)
CPI reserved more time for a more detailed response. “As soon as we prepare the answer, we will organize a meeting with the bondholders,” CPI added. At the same time, however, she has already stated that she is considering legal action against Muddy Waters.
The attack by speculators came at a time when the CPI is trying to reduce debt. He is selling part of the real estate because of this. Most recently, on Monday, it released a report on the sale of the luxury hotel Sunčani Hvar on the Croatian Adriatic coast. On the same day, CPI also announced a change in the position of CEO. Coincidentally, American Muddy Waters also announced their attack on the CPI on Monday.
For a long time it was Vítek who hunted for weakened pieces on the market. He undertook the first such action more than a quarter of a century ago. In 1997, Vítek was only twenty-six years old when he and his associates embarked on the not-so-friendly takeover of the Včela consumer cooperative. Even then, the goal was not retail, but primarily real estate that belonged to Včela.
Vítka’s CPI experienced the greatest boom since 2010. At that time, the real estate business was plagued by the effects of the economic crisis, but Vítka’s predatory instinct worked flawlessly. He sensed that there are many undervalued properties and weakened real estate companies available on the market. In addition, competing foreign funds cleared the market, so Vítek started buying in bulk.
The billionaire succeeded in his masterpiece in 2012. That’s when he acquired almost a third of the Orco real estate group. That is, in a company with a considerable amount of buildings, land, but also debts. Gradually, the businessman took control of Orco. Together with Ork Vítek, he acquired, for example, huge plots of land in Prague-Bubny, one of the largest development locations in the metropolis. At the same time, he took over the Hungarian real estate group Ablon.
Conflict of billionaires
But the expansion was not free. In addition to classic sources such as bank loans and bonds, there was often talk in business circles about silent financing by other prominent names in domestic business.
The CPI itself never talked about it, but at least part of the story surfaced five years ago. That’s when billionaires Jiří Diviš and Marek Čmejla spoke up. They attacked Vítek, saying that he did not keep the agreements and robbed them of billions.
“Our companies, as part of the partnership with Mr. Vítek, provided an investment in his companies in the amount of the then value of his assets. It was a sum of around nine billion crowns. For this amount, we were supposed to participate in half of all revenues and losses of the entire group,” Diviš said some time ago in an interview for SZ Byznys.
“However, Mr. Vítek obviously did not want to share much, and it was very likely his plan from the beginning,” Diviš added.
Vítek actually won the first round of the conflict before the American courts over the Čmejla-Diviš duo. However, his opponents downplayed it by saying that the US courts did not deal with the actual content of the lawsuit, but only rejected it for procedural reasons. That’s why Čmejla and Diviš are far from giving up. This year they are trying to open a new legal front in the fight against Vítek in Cyprus. The dispute involves almost 13 billion crowns.
American funds Kingstown and Alchemy have also been chasing Vítek’s ankles for a long time. They had shares in the Orco group and watched with extreme displeasure how CPI took over Orco ten years ago.