Eximbank finances purchase of 56-hectare riverfront property in Budapest

January 4, 2016

Garancsi István; Orbán Viktor

Market Asset Management Kft., a company owned by István Garancsi (pictured here talking to Hungarian Prime Minister Viktor Orbán at a soccer match), has acquired a 51 percent interest in a large tract of land in southern Buda known as the Kopaszi gát.  The remaining 49 percent was purchased by Duna Riverinvest Kft., a company owned by Miklós Kóbor, a former business associate of former prime minister Gordon Bajnai.

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The 56-hectare property (pictured here with actual and planned improvements), which fronts on the Danube just south of the Rákóczi bridge, was purchased from a Portuguese consortium of companies.  The exact value of the transaction was not disclosed.

The purchase was reportedly financed in part with the proceeds of a HUF 16.5 billion (USD 58 million) loan issued by the Eximbank.

Planning in the works

In a statement released by Property Market Kft. over the weekend, managing director Gergely Árendás stated that “the Kopaszi dam is one of Budapest’s most popular recreational destinations” and that “South Buda was equally popular among those seeking flats and office space.”

The new owners promise to continue to operate the park area situated on the narrow tree- and restaurant-lined peninsula separating the small bay from the Danube river to the east.  Plans to develop the rest of the territory residentially and commercially will be rolled out the first quarter of 2016.

Perfect timing

The transaction is perfectly timed.  On January 1 the value added tax on new residential property decreased from 27 percent to 5 percent for a period of four years.  Furthermore, in December the government rolled out a generous subsidy scheme whereby families with three children (or agreeing to have three children) can qualify for housing grants and low-interest mortgage loans of up to HUF 10 million (USD 35,000) each.

Eximbank

Originally created to finance Hungarian exports, Eximbank is also in the business of making large loans to companies owned by prominent businessmen with close ties to Orbán.

Last month Eximbank was identified as one of two state-owned Hungarian banks to finance government film commissioner Andy Vajna’s purchase of Hungarian television broadcaster TV2.

Hungary’s 23rd most influential person

Rated the 23rd most influential person in Hungary in 2014 , István Garancsi’s influence stems in part from his ownership of the Fehérvár football team, and in part from various companies he launched or acquired with a penchant for making huge profits as the result of government decisions.

Garancsi was reportedly the owner of one of the first companies to be licensed to sell National Tax and Customs Administration-approved on-line cash registers which all Hungarian businesses were required to purchase in 2013.

In September 2014, Garancsi acquired a 51 percent interest in Market Építő Zrt. from Wallis Rt., Kóbor’s former employer where he was head of transactions under Gordon Bajnai.  Eight months later Market Építő was awarded a no-bid HUF 38.6 billion (USD 140 million) contract after the government decided in March to host the 2017 FINA World Championships in Budapest.

(Perhaps a greater measure of Garancsi’s “influence” than napi.hu’s “business barometer” is the fact that the huge no-bid contract was signed and dated May 12 even though the official decision to award it without soliciting bids from competitors was not published until May 26.-ed.)

The midas touch

Through an offshore holding company, Garancsi’s Futball Invest 2007 Zrt. is one of the owners of MET Holding, a Swiss-based natural gas trading company which has made a fortune over the past few years buying natural gas and selling it on to Hungary for a considerable profit, without having to bid against other gas suppliers for the use of the main gas pipeline connecting Hungary to Austria.

In April of 2015, at about the same time the third Orbán government decided to host the 2017 FINA games, Garancsi acquired ESMA Zrt., an important player in the Hungarian advertising and billboard market.  The purchase took place just two months after Orbán fell out with Fidesz oligarch, advertising mogul Lajos Simicska.

Garancsi

For the love of soccer

Frequently seen in the company of the Hungarian Prime Minister (and other prominent businessmen) at important soccer matches, there has been some speculation over the years that their relationship goes beyond a mutual love of Hungary’s national sport.