Jaroslav Havel, the leader of the largest Czech law firm, announced his entry into the family office industry by launching ONE FAMILY OFFICE together with three partners earlier this year. ONE FAMILY OFFICE's top management and advisory body include experts connected to Wall Street and Silicon Valley.
ONE FAMILY OFFICE focuses primarily on clients with over $10 million in disposable assets. In addition to Havel, the company's top management includes attorney David Neveselý, former investment manager of the richest Slovak Peter Bálint and investor Kateřina Zychová, while the advisory board includes economist Vladimír Dlouhý, startup investor and entrepreneur Andrej Kiska Jr. and former CEO of MallGroup Jakub Střeštík.
“Either due to the lack of capital, team or knowledge, perhaps some 20 families and high-net-worth individuals in the country have the opportunity to invest abroad without any restriction. We believe that our ONE FAMILY OFFICE is now among that select group,” said Jaroslav Havel.
“We aim to provide our family office with the highest quality service and plentiful investment opportunities abroad, just like the most affluent and successful Czechs do.”
What is Jaroslav Havel into today?
I’m spread across three areas. The main one is, of course, the HAVEL & PARTNERS group and the various companies that are gradually emerging around it, i.e. consultancy. The other area is the ONE FAMILY OFFICE and along with it its investment arm, managing the assets generated largely through our consulting work. And hopefully, our investments will continue to be profitable.
As a third area I keep the Premium Media Group. There is synergy among all parts and in each one we focus on what we define our clients as, i.e. the smartest, most successful, most reputable and influential people in the Czech Republic and Slovakia.
In the press release on the establishment of ONE FAMILY OFFICE, you state that you started to create the internal investment ecosystem in 2012. Why are you only coming up with it now?
It is an extremely complex and unique concept not only on the Czech market. We build on what we have learned in law and tax, and above all we draw on the position Havel & Partners has built up over time.
To shape all the parts that ONE FAMILY OFFICE now contains – advisory, investment and concierge – in the superior quality we intended, and to define all the client requirements and to learn firstly on our own wealth and on our assets, really meant a lot of work and cost hundreds of millions of Czech crowns.
You mention the market share of HAVEL & PARTNERS. How large is it?
We serve a third of the 100 richest Czechs and Slovaks. For some we work on an exclusive basis, for others we only work on certain things. Through the lens of the Top 100 corporations, we work for 50 companies. However, it should be noted that the larger the firm, the more robust its in-house legal department is.
Moreover, our share of the market of Czech and Slovak billionaires is similar – again about a third out of the roughly 900 people. Our private clients include over 250 mostly business families. Looking at revenues, profits and the number of clients relative to our market, HAVEL & PARTNERS has a significantly larger share than other law firms in developed countries in Europe and the USA.
What individuals currently comprise the ONE FAMILY OFFICE?
First and foremost, the founders. The financial investors are the partners of HAVEL & PARTNERS and it is also a team of lawyers, tax and other advisors of our group. In terms of management, this includes David Neveselý and myself, as well as our investment partners such as Kateřina Zychová, Petr Bálint, Michal Kľučár and the entire investment team of 15 professionals.
At the next level, it's the members of our advisory board who often invest or otherwise work with us. Then there are other business partners who have already invested with us in the past or have money as co-investors in existing projects or have expressed interest in joining us in our future endeavors.
We are not asset managers who have their own products and offer them to third parties. We are a multi-family office, an ecosystem meant for more families and individual investors for individual projects. But we aspire to be able to handle everything: whether a family "entrusts" its entire assets to our investment team or whether they seek only individual co-investments.
How many people invest through you?
The number of individual active investments accumulated over ten years will be many dozens, including internal investors – our partners and colleagues.
These are high-net-worth families and individuals who, of course, often invest through their companies or family structures. In general, there is always a Czech or Slovak natural person at the end, rarely foreigners.
We have clients ranging from billionaires to people working in investment groups, banking and finance, to middle managers, top executives, people in consultancy or athletes.
You currently administer nearly eight billion Czech crowns, but you are aiming at one billion dollars by the end of the year. How are you going to achieve it?
That amount corresponds to the current demand. We will achieve this by processing the current demand and expanding the investors to include a few persons or families that appeal to us in terms of their reputation and business contribution.
We need approximately twelve months to do this. The current amount is largely made up of the assets of the founders and partners of ONE FAMILY OFFICE, with about 20 percent coming from cooperating individuals and companies.
The team includes top crisis manager Václav Novák, economist Vladimír Dlouhý and startup investor and entrepreneur Andrej Kiska Jr. How did you manage to get them?
We built HAVEL & PARTNERS as a firm from scratch. We built ONE FAMILY OFFICE backwards, from the end – as if we were already managing a billion dollars or more. That's why it took so long.
We started building the advisory part in 2001, the private advisory part in 2008, the investment part in 2012 and the concierge part in 2016. The ONE FAMILY OFFICE team was not assembled by individuals, but often by already functioning entire teams.
A joint-stock company will then manage the assets of the clients through trust funds?
No, we do not force clients into any structures. We work mostly with partners who already have a structure in place to manage and protect private wealth, including endowments or trusts. What they demand from us is to be on the board of their fund and to participate in the management.
In such cases, we have very individual ways of remuneration: hourly fees, success fees, success shares. With most other family offices, they usually have a price list of somewhat commoditized services they provide.
We intentionally do not work like this. All is based on agreement, and we can do all forms of mutually beneficial cooperation.
So what do you invest in specifically?
In the long-term, we have been investing in receivables, private debts and distressed assets in general, including real estate. Now we have expanded our investments to include a fund structure and investments in Czech and foreign investment funds.
We have also added passive real estate investments: we aspire to be the new capital carrier for the leading developers we work with and to be able to bring them corresponding capital ranging from CZK 100 to 500 million for individual projects.
As far as securities are concerned, we do not invest much on the local stock exchange, that's what others are there for, as is the case with bonds, here we use cooperating partners too. On international markets, we have prepared investments in real estate and private equity, venture capital and hedge funds, plus directly in companies in these funds or in foreign IPOs.
Over time, we also accumulated a solid internal know-how in stocks, commodities, blockchain, cryptocurrencies that we do for ourselves. Simply the full range of investing according to the standards of large family offices abroad.
Speaking of Czech and foreign funds – what percentage do you usually take in them?
We want to have a significant controlling minority in Czech funds as a general partner, which means we are slowly moving away from purely passive investing. But this is not a strict rule. We select funds that should be capable of annual returns of 12 percent or more. Although we sometimes have the position of general partner, we always leave the majority to the founders or management to be as motivated as possible.
So what is the control about?
We want to be in control of the legal and tax aspect, and we want to be actively involved in marketing and business development. These are the things we provide for them on behalf of our group. I take it that we are making it easier for them to do their job, and they can focus more on their primary activity.
What percentage of the investment in projects is always contributed by ONE FAMILY OFFICE?
When we arrange a large investment, we as founders and partners always put in around 15% ourselves. It can be up to 50 for smaller investments or we can cover the investment entirely ourselves. If we want to set an example for our partners, we must have at least those 15. In addition, for all investments we have to be active managers or advisors.
On the other hand, are there investments that you keep to yourselves?
We do not focus on investments that ultra-high-net worth individuals typically do by themselves. We are speaking about capital markets, as an example.
We see opportunities in what our business partners could not do on their own: for example, to contact a large developer and allocate CZK 100 to 500 million to one project, or to private equity or venture capital, to the USA or India, where capital of USD 10 to 20 million is needed.
This year we are concentrating enormously on foreign private equity funds as a safe way of diversification out of our suffering economy.
Why?
If we look at Czech billionaires or hundred millionaires, they usually have a huge allocation in real estate, disproportionately compared to people from other countries. That is followed by allocation in their main businesses, sometimes in stocks and bonds, but they tend to be extremely under-allocated in global private equity funds, hedge funds and international venture capital funds. So first of all, we approach them with what they don't have.
From a mid- and long-term perspective, we consider it necessary to diversify investments into assets outside Europe as well. The ageing population trend is a reality and models show that by 2050 we will have a ratio of two workers to one senior citizen aged sixty-five and over in Europe. This will put enormous pressure on public budgets and few politicians will be willing to push through much needed reforms against the will of elderly voters.
If at this point a Czech billionaire is locked in the Czech region, while being typically still heavily allocated into real estate, they are likely to be burdened with increasing levels of various public levies and regulations. Our foundation and holding structures and asset mix, on the other hand, allow for maximum international flexibility.
Why are there no Czech billionaires in private equity?
For one thing, these funds have rather high minimum entry thresholds, so for capital, they would have to put disproportionate amount of their wealth into them. The other thing is that it is very difficult to set it all up in terms of time and taxes and law.
So which particular fund are you in?
I can mention the fund that we and our partners closed the first round of funding for before Christmas, which is the Vista software fund. It is one of the world's top ten funds and, along with Thom Bravo, the best-known software fund in the world.
When introducing ONE FAMILY OFFICE, you mentioned its international ambitions – and the fact that they coincide with those of your law firm.
We are extremely interested in Dubai, where Peter Bálint has lived for a long time and has ties to the local business community and the largest non-royal family office, which manages about ten billion dollars. Number two is Frankfurt, which will be the only western office for HAVEL & PARTNERS.
Isn't the German legal market quite impenetrable?
We will not compete with the local firms; our firm here will be the representation of Central and Eastern Europe. In Germany, a number of entities, both local and international, are interested in working with the CEE region in the long term, so I believe that we will provide them a better opportunity to do so.
This interview was published on the Forbes.cz website and was abridged.
