By Tuck Communications
Published Jun 21, 2010
Zdenek Bakala was not cut out to lay bricks. So when Czechoslovakian bureaucrats in his hometown shunted him onto a bleak tradesman track at age 19, he hid a $50 bill inside a sandwich and slipped over the border in search of a better future.
About a decade later, armed with a Tuck MBA, Bakala would return to prod the new Czech Republic into capitalist mode, start its first investment bank, help reform the stock market, broker megadeals, and acquire the coal industry. Today, as he puffs on cigars that cost nearly as much as the money he escaped with, Bakala says of 1980, "I never thought I would go back, and I never, never thought that communism would collapse in my lifetime."
With tenacity, an appetite for hard work, and a certain strategic vision, Bakala propelled himself from washing dishes in a Lake Tahoe casino to UC Berkeley for a bachelor's degree in economics and then to Tuck. "Everything I've been able to achieve is due to my American education and especially Tuck," he says.
On his path back to Prague, Bakala touched down briefly in New York and London investment banks before being tapped by Credit Suisse First Boston in 1991 to establish its Czech operations. With free-market expertise unknown to Prague, he ushered the government through its first major privatization—a $1 billion deal between Czech carmaker Skoda and Volkswagen—and had a hand in "every significant transaction at that time. I was able, willing, and often did work 24 hours a day."
In 1994, Bakala founded Patria Finance, the first Czech investment bank. The bank hired the first chief economist, engineered the first corporate and government bond issues, and helped privatize retail banks. "We basically invented how things are done in the country even today." In 2001, Patria was sold to KBC, a Belgian banking group.
Cash in hand, Bakala and Tuck grad Peter Kadas T'90 ("a Hungarian with a very similar life"), co-founded a private equity company, RPG Industries, and aimed their sights on older, undervalued industries. Convinced of coal's future, they pulled off a $510-million leveraged buyout of the country's black-coal mining conglomerates. After streamlining operations and spinning off subsidiaries for $2 billion, they took a third of the assets public in May 2008: the $2.1 billion IPO of New World Resources set records on the Prague and London stock exchanges. "If we had not bought the Czech coal business, it would not exist today," says Bakala, who also reports doing well with investments in Ferrexpo plc, producer of Ukrainian iron ore. "The forgotten, old-economy assets have given us a better return," he says. "We like tangibles." Their companies went on to acquire Czech transport services, German real estate, Belorussian rail companies, British financial services, and, for fun, the classiest Czech publisher.
Today, just shy of 50, Bakala is slashing his work hours so that he can do exactly what he pleases, which turns out to be playing with his toddlers. "I once enjoyed Prague's great nightlife," he chuckles. "Now the only thing I want to do in the evening is be home with my children." He and his family move between Prague, Geneva, and Hilton Head, where a teenage son from his first marriage lives.
Along the way, Bakala continues to consider other young futures. His companies have sent several employees to Tuck Executive Education programs. His foundation grants scholarships that allow top Czech high school students to attend universities in the United States and Britain for their entire undergrad experience. And in February, he endowed the Bakala Professor of Management faculty chair at Tuck. "The skills I learned at Tuck translated into success in entrepreneurship," Bakala says. "I want to make sure this experience continues."