Pharmacy network Dr. Max, which falls under the wings of the Penta group, issues five-year bonds for 2.5 billion crowns with a possible increase of up to five billion crowns. “The funds raised will go towards further acquisitions and investments within the Dr. Max,” stated Penta group spokesman Martin Lánský.
European pharmacy chain Dr. Max Group recently announced the purchase of the Italian pharmacy chain Neo Apotek. With this step, it plans to strengthen its position in the local market, where it will control 210 pharmacies. The total value of the acquisition reached 400 million euros, roughly nine billion crowns.
However, the specific purpose of using the bond money was not specified. At the same time, part of them can be invested outside of Penta’s pharmacy business. According to the prospectus, it is allowed to lend them to the shareholders of the guarantor, i.e. outside the holding Dr. Max.
The issuer of the bonds is Dr. Max funding and repayment is guaranteed by its parent company Glebi Holdings, belonging to Penta. The issuance of the bonds was approved by the Czech National Bank (ČNB) in mid-November.
Attractive interest rate
With the promise of appreciation of 8.5 percent per year, which corresponds to this year’s October year-on-year inflation, the offer appears to be an interesting investment. And this is also in the context of the expected reduction in CNB interest rates in the foreseeable future, which will be reflected in lower interest, for example, on savings accounts and time deposits, which currently bear around six percent per year.
The subscription of bonds will run until noon on December 8, 2023, and the value of one bond is 10,000 crowns. Small investors can buy them from one of the domestic banks or through a stockbroker. At the same time, a large part of these bonds could flow into the portfolios of many bond funds.
At the same time, the bonds will also be tradable on the Prague Stock Exchange, and according to experts, their yields are among the best that the corporate bond market currently offers. A similar interest rate is usually offered by companies that are significantly smaller or do not seem trustworthy.
Nothing is without risk
“Fixed interest at 8.5 per cent per annum for five years really looks attractive at the moment given the expected fall in inflation and rates. In addition, the bond will be accepted for trading on the regulated market at the Prague Stock Exchange, which should ensure higher liquidity in the event of a need to sell before its maturity,” says bond expert Jakub Brukner from Patria Finance for SZ Byznys.
In addition, investors have already gained positive experience with several bond issues that Penta previously issued in euros. However, no investment is risk-free, as investment guides claim. “In short, every issuer has the possibility that it will not be able to meet its obligations,” points out Brukner.
“Retail investors often attach great importance to the brand awareness of the issuer when making their decisions. However, this in itself does not say anything about the real safety of the issue. That is why investors, not only in this case, are always advised to familiarize themselves with the conditions of the issue in detail and to understand the risks associated with the investment,” explained bond issue expert Peter Turner from WOOD & Company to SZ Byznys.
Today, Penta under the brand Dr. Max operates a total of almost three thousand pharmacies in the Czech Republic, Slovakia, Poland, Romania and Italy. This makes it the largest pharmacy network in Central and Eastern Europe and the second largest in the whole of Europe. As of this September, it had 495 pharmacies in the Czech Republic alone and employed four thousand people.
Last year, the pharmacy network increased its sales by a tenth to 24.8 billion crowns. Of this, the online store took 2.3 billion, a year earlier it was 1.9 billion.