You come from the world of private equity. What brought you to Lexxus Norton?
I was first working at Škoda Pilsen in Mergers & Acquisitions along with some PPP projects. I’d been there for about two years when one of the co-owners sort of pulled me out and we started BHM Group. I was there for 10 years, doing mostly private equity activities, some real estate, and I was also involved a bit in the renewables.
After 10 years, I decided to step out to start something of my own, which is this real estate group that we called BO! Holding. We founded it with friends from university who were involved in real estate at MM Reality and Broker Trust. My background was totally different so I sort of brought in the bigger picture of how to create a strategy and how to properly be a presence in the market.
The original idea was just ‘let’s start an agency,’ which became the BO! agency. The other guys had some relationships with some agents, so at first all we had was five agents. Over time we grew it to around one hundred agents and 15 branch offices. Last fall, we bought Realitni kancelar STING, which added 150 agents and roughly 30 branches into the group. Finally in March, BO! Holding acquired a 50% stake in Lexxus Norton. The reasoning was that while we had these classic retail agencies that handle standard housing, we were missing the premium real estate segment. Also, we didn’t have a presence in Prague.
Are you thinking in the opposite direction as well? Do you see a role for Lexxus Norton in other cities?
One of the ideas is to bring Lexxus Norton to the other major cities like Olomouc, Brno, Pardubice, and Plzen where they can sell development projects. The issue is that our activities were working basically just on sales. It wasn’t the whole package, that Lexxus Norton offers: consulting, marketing, project management. Now, we can take the developer by the hand and work with him through the whole project for two and a half years. Few agencies do that, even now. That’s what’s very specific about Lexxus Norton; it’s a unique sort of know-how.
I assume you thought it would take too much time and money to try to build that organically.
Absolutely. The brand is very strong. It’s been on the market for 30 years and worked on hundreds of development projects. The references Lexxus Norton has can’t be replaced by starting over. You have the team and the know-how, with a lot of professionals that have been here for 15 years or more.
What Lexxus Norton hasn’t been doing has been to expand this know-how, and we want to use our platform to expand. I think that this is a big opportunity and this was part of our strategy when we were getting involved.
We also want to bring the retail second-hand market from our brands to Prague. So, open branches of Sting or BO!, in Prague or in Central Bohemia to create synergy and to cover the non-premium market that Lexxus Norton doesn’t really do. There’s almost no overlap.
In terms of expanding Lexxus Norton, do you think there will be a market for its services in the other cities? That no one’s really doing that yet?
I don’t think there are many companies that are really equivalent to Lexxus Norton. The problem of Lexxus Norton is it doesn’t really show what they know. I think it’s very under the radar and we want to change that. We want developers to understand that the real value creation we do starts right at the beginning of a project. It starts as soon as they start thinking about a project, not just once sales begin. Because by then, it’s too late to maximize our know-how. But in regional cities, the agencies are still very transactional. They basically do just the sales. So, the quickest wins for Lexxus Norton will obviously be Central Bohemia because we can do this from Prague. But we’ve already got a big project in Olomouc that’s waiting for a permit.
So, you’re essentially betting you’ll be able to give investors that Lexxus Norton has worked for here in Prague the comfort they need to invest in other cities they don’t know as well?
Well, that’s exactly the case with Olomouc. It was our client in Prague who told us he had some land to build on there, but it’s very hard to do from Prague. We have a big branch of Sting right in Olomouc with very experienced people who can price things with real precision – down to the tens of thousands of crowns. So, Lexxus Norton brings in the know-how consulting, the marketing agency that we have in-house and the project management. But the local stuff will be done by a local team that understands the market, knows the people, and has an office there. I don’t think anybody else in the market has this. And nobody has the firepower we do going forward.
What are you planning to do with that “firepower”? Where do you see the best opportunities in terms of deploying equity to help you grow?
Well, we have capital to build up the agency branches, which is required upfront. First you have to have the branch and then the people can come. So, if you want to go into Central Bohemia, Pilsen, Liberec, and Usti nad Labem, that requires tens of millions of crowns to set up the physical offices.
You’re referring now to your other agency brands, though. Not Lexxus Norton.
That’s right, though I think Lexxus Norton will also have branches. We should definitely have one for example in Brno. I think that’s a question of one year or so. And then we will see which cities sort of are coming to life.
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