Pavel Hubáček, owner of CREDITAS Bank and the investment group of the same name, has been on the list of top 20 richest Czech people for several years now. He is a conservative investor. This approach has paid off for him in business – he started out in the early 90s, and his net worth is now estimated to be 15 billion CZK. His empire is built on three main pillars – financial services, energy, and real estate.
CREDITAS group is one of the fastest-growing investment groups in Czechia. How did you get here and what is your main focus?
It has been quite a journey, years of hard work. I am not a fan of speculative investments, I would call myself a rather conservative investor. A certain inclination naturally follows from that. I prefer long-term investments in conservative sectors. CREDITAS group’s strategic priorities are financial services, energy, and real estate. We seek out new opportunities in the market, leverage them, and further develop their potential. Thanks to our responsible approach to investing, we have managed to grow and maintain high returns on our investments in the long run.
CREDITAS Bank is your most well-known asset. The Czech banking market is controlled primarily by foreign banks. How does CREDITAS compare as one of the few Czech outliers?
Rather well, I would say. We are taking a bit of a different approach to banking as opposed to traditional banks, which have evolved according to the examples set by their parent companies from abroad. CREDITAS is a conservative bank with Czech roots and more than twenty-five years of financial services experience. We definitely have a place in the market. Quite likely due to our individual approach to retail and enterprise clients alike, which allows us to meet their specific needs. We offer a high standard of services for a reasonable price. As opposed to traditional banks, we do not send our returns abroad to a parent company, which allows us to share profits with our clients in the form of higher yields on their deposits and investments. In keeping with our motto “Ask more of your savings”. When it comes to loans, we focus primarily on financing Czech companies, which are often not as enticing for larger banks.
You started out with 20 thousand clients, that number has increased sevenfold in five years. Sounds like a reason to be satisfied.
Expanding the client base is a logical avenue of growth for a bank. We have over 150 000 clients and the number keeps growing. We are constantly expanding our portfolio and improving our services in order to serve them in all possible aspects. Internet and mobile banking is a big focus for us. Last year, we acquired Ekorent, a leasing company offering finances to doctors. The Czech National Bank has granted us a license to start our own investment company a few months ago, so the plan is an even more extensive expansion of our investment vehicles. We would like to start offering consumer loans to our clients this year as well.
You have been investing heavily in property development in recent years, you bought a development company and you talk a lot about your rental housing plans.
Yes, I see great potential in rental housing. It is extremely popular, especially in countries of western Europe such as Germany, Austria, and Switzerland. About half their population lives in rentals. I am expecting things to go the same way here. Property prices, especially in Prague, have reached levels where owning is no longer possible for many people. This has been exacerbated further by rapid growth in mortgage interest rates. We plan to have hundreds of rental apartments in Prague and other big cities on offer in a five-year horizon.
Do you have any concrete plans in this regard? Are you planning to do things differently than other companies?
We have purchased properties in Prague as well as the rest of the country. The V Invest development company we own is taking care of the construction of the apartments. The first rental apartments in Prague should be available by the end of this year. Our plan is to cater to all sorts of clients, from students and young couples all the way to the very demanding customers who are in the market for spacious high-end apartments in the center. As opposed to rentals that people are used to, where an individual is renting out their apartment, we, from the position of a strong investor, want to offer people a more systematic approach and a higher standard of services. The intention is not just to construct a building, sell it, and forget all about it. We want to maintain it, rent it out, make it into a profitable long-term asset. We can leverage the CREDITAS group synergy and offer our tenants financial services or supply them with energy.
Talking about energy – CREDITAS group is focusing on it more and more, and your company UCED is one of the largest energy suppliers in the country…
I see the energy industry as one of the key sectors when it comes to the functioning of society, and I have always found it interesting. You cannot go purely after profit and not take on any additional responsibility when it comes to the energy industry. Only those who have a clear vision, strive to keep improving, and are able to think ahead have managed to stay in the energy market. The recent “energy tsunami” evidenced this – a number of energy suppliers collapsed, showing many consumers just how cutthroat an enviroment the energy industry really is. Those who saw energy as a get-rich-quick scheme are long gone from the market for the most part.
You used to be focused primarily on distributing electricity. Nowadays, however, the UCED brand comprises a wide array of companies that produce, distribute, and supply.
Our distribution networks supply energy to more than six thousand regular consumers, including industrial enterprises, logistics centers, administrative buildings, as well as residential districts. It has been pointed out to me from the very beginning by my team of energy industry experts that, in order to make ourselves a mainstay in this quickly-evolving sector, we need stable and reliable partnerships. These have not always been easy to find, so we started doing certain things ourselves, which significantly expanded the scope of our services. We have a clear strategy – our goal is to build new energy sources and bring them closer to the consumers, we want to be the leader in decentralized energy with a heavy focus on energy safety.
Decentralized energy is a term we hear often. What does it mean in practice?
The energy industry is facing a wide array of challenges. It is forced to react to climate change, work with modern technologies, and adapt to a new normal in society. For a long time, the Czech energy industry has been centralized, planned, based on a system that was controlled by a few key players. Nowadays, coal covers over 40% of Czech consumption. Czechia will likely lose a significant portion of its current energy sources by the end of this decade due to the planned termination of the use of fossil fuels. The way to properly decarbonize the energy industry is to support the construction of smaller-scale, decentralized sources that will gradually phase out all fossil fuels.
Is that the way UCED plans to go? You recently acquired one of the largest biomass heating plants in Czechia, for instance...
I see the future of the industry in a blend of services ranging from energy distribution, through energy grid stabilization, all the way to production itself. A shift from the traditional centralized energy industry to a new decentralized and ecological industry with a higher number of small-scale local energy sources. This will place heavy demands on electricity and gas distribution. Renewable sources are unpredictable, they depend on current solar and wind conditions, which requires advanced management. We do have to keep in mind, however, that a decentralized energy industry includes renewable sources, energy distribution, the associated heat management, commodity trading, and so on. Everything is connected.
Flexibility is a term often used in this regard. UCED is one of the few companies that assist ČEPS in keeping the energy grid balanced.
The decentralized energy industry, which we are striving for in the UCED group, is not just about modernization, distribution networks, or building energy sources. Our vision is the associated know-how, the way to use the energy we produce in a sustainable, economical manner with the help of artificial intelligence. We have been focusing on providing services related to energy balance long before the revolutionary change to the ČEPS code came along. Our proprietary operation-business dispatch system communicates with aggregated sources and facilitates the stable functioning of the entire network. It can best identify places where there is sufficient power, turn the given source off, and transfer the power to another source, all on its own. It can automatically increase or decrease consumption. Aggregated virtual blocks are precisely the thing that ensures a network is stabilized, and they can also be very effective in combatting potential blackouts.
Are there other sectors that you can see yourself investing in, ones that make sense to you?
I want to keep developing our current activities, bolstering the three areas I have previously mentioned. But we are of course keeping our eyes open in the market for other interesting opportunities to allocate free capital to.
Conversely, are there CREDITAS group assets that are for sale?
CREDITAS is an investment group that is in the business of buying, increasing the value of, and selling companies. All of the companies we own are for sale, in theory. It is just a matter of receiving an enticing enough offer.
What are the group's plans for the future?
The group has been growing on average by 20 percent per year since 2015, and we intend to keep growing. Our strategic priorities are further growth of CREDITAS Bank, energy investments, and developing our rental housing division. We do not speculate; we own tangible, substantial things that bring in real and predictable profits. Investors know what they invest in when they come to us. Our philosophy is creating solid values, and we offer investors the chance to create them together with us.
“I prefer long-term investments in conservative sectors,” says Pavel Hubáček.
Pavel Hubáček (born April 21, 1969, in Olomouc) is the founder and owner of the CREDITAS investment group and CREDITAS Bank.
He has been one of the 25 richest Czech people for several years. He is a conservative, cautious investor who focuses on long-term strategy and the real value of assets. Financial services, real estate, and energy are the three pillars of his business.
Under his management, CREDITAS group has become one of the fastest-growing Czech investment groups. Its assets under management are currently valued at over 85 billion CZK.
Hubáček is married, he has four children. He loves good wine and modern art.
The European Union Green Deal directly relates to a part of Pavel Hubáček's activities. How does he think that the Deal has been impacted by the events in Ukraine? “I think that the war in Ukraine will not change the EU's long-term climate goals,” he surmises. “It might mean an adjustment of some goals in the near future. The situation in Ukraine has only confirmed that Europe – including the Czech Republic – needs to diversify its energy sources as soon as possible. We simply cannot be fully reliant on a sole supplier of gas. The European energy independence scare could be a new impulse that leads to increased investments in emission-free sources of energy and subsequently supports the Green Deal.”
CREDITAS group is one of the fastest-growing investment groups in Czechia. It focuses mainly on long-term investments in conservative sectors.