10 QUESTIONS
With Jean Francois Ott
 | | Orco's PSE listing garnered exposure and investors, said President and CEO Jean Francois Ott. |
By Frantisek Bouc
March 10, 2005
Luxembourg-based real estate company Orco recently made dual listings on the Prague Stock Exchange to become, after Austria's Erste Bank, the second foreign company traded on the Prague Stock Exchange. Orco's president, Jean Francois Ott, talks with The Prague Post about the company's experience on the Prague bourse, and the development of the country's real estate market.
Orco entered the Prague Stock Exchange in early February with big expectations. How did the first month go? Has anything exceeded your expectations? Anything that disappointed you?
We have been surprised by the [trading] volumes that [are five times as high as when the listing on the Prague Stock Exchange was made]. And we have also exceeded our targets regarding the entry of new investors. One of the purposes was to reach managers of emerging-market funds who stipulate before placing their investments that a company [in which the investment is made] needs to be listed on a Central European stock exchange.
• Orco stocks grew by about 12 percent over the first month of trading. Given the bourse's continuous rise, did you think the rise could have been even bigger?
We didn't expect the rise to be so fast, but we have been really supported by large financial analysts' coverage. It helps to let the market know about Orco — its story, strategy and activities.
• Did the PSE's rise speed up your decision to enter the bourse?
Not at all. We validated this decision at the end of October 2004, when the share price was less than 30 euros [then about 950 Kc]. The main reasons [for entering the bourse] were more visibility and reputation, new targets with emerging-market funds and then [securing an additional] financing source.
• What were the biggest obstacles that you had to face in preparing for listing on the PSE? How did it compare with entering the bourse in Paris? We haven't faced any real difficulties. We have been welcomed by the PSE and the Securities Commission within the framework of the law and regulations. We have been listed on Euronext [in Paris] for five years now and have always been really transparent to regulatory authorities and shareholders. I'm sure it helped for this second listing.
• With the boom in the building sector, wasn't entering the PSE a sort of marketing promotion rather than a search for additional funding? Would you agree that entering the bourse earned you greater exposure in the media?
JEAN FRANCOIS OTT
• Job title: President and CEO, Orco real estate development company
• Age: 40
• Nationality: French
• Previous job: Financial derivatives trader, Paris
• Education: Institute of Political Sciences in Grenoble; INSEAD, Paris
• Family: Married, two sons |
We wanted both visibility on our main market and new investors. But don't forget, a listing is a lot of work and has its costs, too. Concerning our businesses, we have been present in Prague since 1991. I'm glad if more of our clients know about our real commitment in the Czech Republic, but the quality of your product and how you talk to clients are the best ways to sell.
• From 2007, value-added tax on construction works will increase from 5 percent to 19 percent. Is there a rush among developers and construction firms to complete as many housing projects as possible by 2007? First, the rush is relative because building permits are still difficult to get in the Czech Republic.
Second, competition is positive for clients because if you build more, the [builder] also saves money with economies of scale.
I also think the increase could be positive for a very important reason. It means that it will bring fresh money to the state and local communities. So, we could expect new sites. ... At the moment there are not so many because [neither] the state [nor] local authorities [can] afford it.
• Orco recently announced it intended to develop residential projects outside Prague. Do you believe such projects can be as lucrative as Prague-based projects? Is the Prague market getting saturated?
First, Orco invested in Ostrava by purchasing the Imperial Hotel a few years ago. Secondly, [Orco's Czech agent] IPB Real has been developing housing programs outside Prague already for several years. I think it's important to be present in the main Czech cities, but it doesn't mean that the Prague market is saturated — not at all. I'm still very confident with this.
• Most developers focus on housing projects. Does that mean there is already enough office space in this country?
Orco delivered its first apartments in 1992, so this is not a new business for our group. Concerning the office market, I still think we are far from West European [markets] if you consider both quality and the number of square meters per inhabitant. I mean, there is a lack of quality projects in Prague.
• You've been doing business in this country for a fairly long time. What are the best and the worst aspects of doing business here?
I never know how to answer this question, except [to say] that I like to do business. I like to do business in the Czech Republic.
• As a French citizen residing in Prague, how hard is it to be away from your home cuisine? Is there any Czech meal you particularly like that could be successful in France?
It wasn't so difficult, as Prague [offers] good French restaurants, for example, Chez Marcel and Le Bistrot de Marlene. French restaurants in Prague are particularly good. Concerning the Czech Republic, I always repeat: You have the best beer [in] the world and I don't understand why we cannot get some more easily in France!
Want your top manager to answer our 10 Questions? Send a message to Frantisek Bouc atfbouc@praguepost.com
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