About As


Written by Sunday, 27 October 2019 21:38


hangulatkep 1When Arago started its operation at the turn of 1995 and 1996 the company acquired a majority share in Eravis Plc. and with this step started its asset management activity.


hangulatkep 5Following a long-term investment strategy Arago was working on acquiring majority shares in regional pharmaceutical trade companies and in national hotel, restaurant and catering firms. As a result of this in 1997 Arago obtained majority shares in pharmaceutical trade firms in five counties. On 28 November 1997 the three biggest companies with adjacent territories merged and became Westpharma Plc. In 1997 through Eravis Plc. as strategic investor the company managed to get hold of nearly 50 percent of Hunguest Hotels Plc.’s shares.


hangulatkep 7The pharmaceutical trade portfolio further expanded after buying the shares of Székesfehérvár-seated Pharmaprevent Plc. Arago also acquired considerable share in Hungary’s biggest mortgage lender BÁV Plc. by means of classic acquisition. Also this year HUF 150 million worth of Eravis Plc.’s equity shares were transformed into priority dividend shares, for the benefit of Eravis’ small investors.


In 1999 there were major changes in Arago’s portfolio. In the first half of the year two former investments were sold. The company’s share in BÁV Plc. was sold to MFB Plc. with modest profit, who a few months later delisted the shares at the Budapest Stock Exchange. Following months of negotiations with international and domestic strategic and financial investors, in June Arago sold its share in Westpharma Plc. too. These two transactions provided the company with the necessary financial resources for buying Zalakerámia Plc. shares at the stock exchange. The 15-percent ownership acquired this way was enough for the Arago group to take over management of Zalakerámia at the general assembly at the end of the 1998 business year, thereby stopping the Zalakerámia group on its route to bankruptcy. During the year the group that consists of Budapest-seated Zalakerámia Plc. (tiles, floor tiles, stove tiles), Bucharest-seated Cesarom SA (bath tubs and sinks, tiles, floor tiles) and Zagreb-seated Inker SC decided to reorganise its activities and closed factories which were generating loss; at the same time negotiations started to reschedule the paying back of loans exceeding the group’s equity capital and to improve the conditions of the loan contract, transforming the companies from production oriented firms into market oriented businesses. Significant growth occurred in Eravis Plc., one of the older investments in Arago’s portfolio, when in October 1999 a public takeover bid resulted in acquiring 68.46 percent of ERAVIS Plc.’s shares.


This year was mainly spent with restructuring earlier acquisitions of the holding and strategic investments (Pick, Zalakerámia, Eravis, Hunguest Hotels) ended up in Arago Plc. During the year Zalakerámia Plc.’s capital was increased and this step raised the company’s share to 16.56 percent, while in Eravis Plc. the share of ownership reached 74.9 percent. The biggest event in Arago’s history was buying nearly 33 percent of shares in Pick Szeged Plc. In the second half of the year the company sold its share in Domestore Ltd. and after a long negotiation process the management also decided to get rid of its 30-percent share in Taverna Plc. On 11 June the process of converting 2000 HB Westminster II. Plc.’s equity and interest bearing shares into Arago Plc.’s equity and interest bearing shares was completed. In a decision made on 28 August 2000 the company’s Board of Directors declared unswapped shares invalid – this decision was published in the 21 September 2000 issue of Cégközlöny (Company Journal). In December 2000 the general assembly authorised the Board of Directors to purchase equity shares for nearly 10 percent of the equity capital, in the nominal value of HUF 485.041.000.


In 2001 by means of capital increase Arago Plc.’s share in Pick Szeged Plc. grew to 41.34 percent. On 1 October 2001 the company submitted its public takeover bid for Pick Szeged Plc.’s equity shares to the Hungarian Financial Supervisory Authority (PSZÁF). After the bid was adjourned on 3 December 2001, in its decision III/26022-3/2001 PSZÁF acknowledged the offer at the price of HUF 4.270 per share. The public bid was successful and on 7 January 2002 the transaction was completed, which was also approved by the Hungarian Competition Authority. Arago got hold of a significant, 49.99 percent share in Falcotrade Meat and Trade Plc. by means of capital increase and in the second half of the year this was raised to 53.3 percent by purchasing shares and sold to Ringa Meat Plc. In a decision made on 5 April 2002 the Hungarian Competition Office ruled that an inspection had to be conducted in connection with this transaction, therefore Arago Plc. made provisions for the HUF 367-million profit on selling the parcel of shares. After announcing a public takeover bid for Eravis Hotel and Catering Plc.’s shares – which was approved by PSZÁF with decision III/26016/2001 – the company proposed the delisting of Eravis Plc.’s equity and priority dividend shares at the Budapest Stock Exchange. In January 2002 the Budapest Stock Exchange deleted the stocks from the trading list. It was still in this year that Arago Plc.’s share reached 97.27 percent, while in the case of Zalakerámia Plc. transactions throughout the year (selling, buying) and capital raising Arago increased its share to 26.13 percent. Together with Eravis Plc. the company already had 30 percent of votes. During the year Domestore Ltd. (the company’s parent company) implemented two non-public capital increases in Arago Plc., which augmented the group’s registered capital to HUF 7 billion. Domestore Economic and Business Management Consulting Ltd. made a public takeover bid for Arago Plc.’s shares (PSZÁF 27 June 2001, decision III/26.017/2001) that was acknowledged by its decision.


This year Arago acquired 90.71 percent of Pick Szeged Plc.’s shares by means of a successful public takeover bid and with having Pick Szeged Plc.’s equity shares delisted at the stock exchange. Eravis Real Estate Plc. was transformed into a close corporation and Arago Plc. had 99.68 percent of votes. The company’s shares in Hunguest Hotels Plc. and Zalakerámia Plc. didn’t change in 2002. The parent company made an offer to buy Arago Plc.’s ‘C’ series bearer equity shares at the price of HUF 600/share. As of 11 June 2002 the managing director of the Budapest Stock Exchange deleted the stocks from the Stock Exchange Bonds List. In April 2002 the Hungarian Competition Authority started proceedings against Arago in the Falcotrade Plc. case. The Board of Directors asked for the revision of the ruling. In July 2002 the competition authority’s Competition Committee suspended the proceedings in the Falcotrade Plc. case, therefore the contractual condition of the Hungarian Competition Authority’s approval for selling Falcotrade Plc. wasn’t fulfilled. After negotiations with Ringa Plc. (the buyer of Falcotrade Plc.) Arago Plc.’s board decided to sell the investment and instead of buying it back Arago would compensate for the difference between the sums Ringa Plc. paid for and received. Thanks to this move the holding realised a profit of HUF 140.5 million with the Falcotrade Plc. deal.


In the 1st quarter of 2003 Arago sold its remaining share in Zalakerámia Plc. During the year the company used its significant dividend revenue to stabilise its asset position and started looking for new acquisition opportunities in Hungary and abroad. The stable financial situation created the chance to place resources acquired in capital markets efficiently, and the group also increased its share further (94,01 percent) in Pick Szeged Plc., bought 12.08 percent of BÁT Plc., purchased 8.47 percent of BÉT Plc. and 32.93 percent of the votes in Forrás Plc.


2004 was the year of closing positions. In the first half of the year Arago considerably raised its investments in the Budapest Stock Exchange and in the BÁT Commodity Exchange, which the company later sold to a bank consortium with Austrian majority ownership – this transaction realised profits above HUF 2 billion for Arago.

At the end of the year the company made a public takeover bid for buying the equity shares of Forrás Plc. and this step resulted in getting 88 percent of votes. Ever since Arago acquired 49 percent of shares in Hunguest Hotels Plc. the owners were negotiating about restructuring the company group and about Arago Plc. buying more shares in the group. In 2004 Arago managed to get hold of 99 percent of voting shares and at the same time the company started establishing a standard organisational structure (all the hotel buildings ended up in the ownership of Hunguest Hotels Plc.). The Arago Group – Arago Real Estate and Consulting Plc. (formerly Eravis Plc.), Forrás Plc. and Arago Plc. increased its ownership in ÖBÖL XI Ltd. to 65.5 percent, a company which owned an empty plot of land bigger than 50ha and suitable for real estate development purposes (Budapest, 11th district), located close to Lágymányosi Bridge. It was also in this year that Arago took steps in the direction of foreign investments: it founded a company in Montenegro which bought two seaside hotels in 2004. As regards PICK Szeged Plc., one of the company’s most important investments, a key period ended in the history of the group. It was trying in vain to find investors in the Hungarian market, Pick Szeged Plc. got more and more exposed to the pressure coming from hypermarket chains and because of a weak forint the profits realised on export sales dropped. Several strategic and financial investors from Hungary showed interest in investing in Pick Szeged Plc., and as a result of this the R-KO-N group purchased 25 percent of shares and became a co-owner.


In April 2005 the process of trying to find investors for Pick Szeged Plc. ended, Arago waived the contract on the parcel of Pick Szeged Plc. shares sold to R-KO-N earlier and sold its remaining shares to three different investors. Arago Plc. has no ownership in Pick Szeged Plc. any more. Selling its shares the company realised considerable loss that influenced its financial results in 2005. In the 1st half of 2005 the company established ÖBÖL Invest Ltd. Arago Plc.’s affiliates:

  • Arago Real Estate and Consulting Plc.,
  • Eravis Real Estate Ltd.,
  • Hunguest Hotels Plc.,
  • Forrás Asset Management and Investment Plc.,
  • Öböl XI. Ltd.,
  • Ulcisia Castra Plc.,
  • Immo-Next Plc.,
  • Immo-Ex Ltd.,
  • Öböl-Invest Ltd.,
  • Pla-Mil Plc.,
  • Hotel Kikelet Ltd.,
  • Hotel Maróni Ltd.,
  • Hotel Panoráma Ltd.,
  • HH Invest Ltd.,
  • Hotel Ózon Ltd.,
  • Silver Shore Ltd.,
  • HH Montenegro Doo.


According to section 177, point (4) of Act 144 of 1997 on Business Associations, as of 1 July 2005 the name of private limited companies must include the form of operation, therefore on 27 April 2006 Arago’s general assembly decided that the company’s official name would change from Arago Investment Holding Plc. to Arago Investment Holding Close Corporation Private Limited Company. On 15 June 2006 the Court of Registration registered the name change. In compliance with section 173 of Act 4 of 2006, on 31 October 2006 the company’s general assembly changed its form of operation: from an open corporation Arago Investment Holding private limited company was turned into a close corporation. In accordance with this, the company’s official name changed from Arago Investment Holding Open Corporation Plc. to Arago Investment Holding Close Corporation Plc. On 13 December 2006 the Court of Registration registered the changes in the form of operation and in the name. In the course of the year the following major transactions took place: selling a part of Öböl Invest Ltd. (currently it has 99-percent ownership in Öböl XI Ltd.) within the consolidation circle. In addition to this Arago purchased a significant amount of priority dividend shares in Forrás Plc. and currently the company’s ownership is 87 percent, and the majority of the sum listed among liabilities originates from the fact that paying for the parcel of shares extended over from one business year to another. Arago Plc. and Forrás Plc. acquired joint ownership in Marmion Ltd. – their primary objective with this firm is implementing investments in Hungary and abroad. Arago Real Estate and Consulting Plc.’s registered capital was reduced. This year the company raised Eravis Real Estate Ltd.’s capital significantly.


One of the biggest results this year was that the nearly HUF 10-billion receivables manifested as cash for the company. At the end of the year Arago formed Sunbelt Development Plc., the main task of which was searching for plots of land for logistics, trade and industrial use in neighbouring countries. One of the first acquisitions was realised in the 1st quarter of 2008 in Bulgaria, where the company purchased a 16ha area.


This was the year when the company pursued classic investment activity. The company group increased the number of agricultural-profile businesses among those it intended to buy earlier and those already among its affiliates, plus it also did some restructuring (Gyékényesi Mg. Plc. and Fűzvölgyi Mg. Plc.). In the 2nd half of the year Arago acquired 50 percent of Komáromi Mg. Plc.’s shares but sold them in December 2008. The company built a 5-percent position in Rába Automotive Holding Plc. It also managed to compile a rather large portfolio with long-term Euro-denominated OTP Plc. bonds, for which the group partly paid from bank loans. This year an important change occurred in the area of invested assets too, because in early 2009 the company sold its share in Öböl Invest Ltd. so the share was reclassified to the ‘share in associated undertakings’ line in the balance sheet. Arago Plc.’s economic, financial and liquidity position was exceptionally good despite the worldwide economic crisis.


Unfortunately 2009 ushered in the negative influence of the economic crisis and Arago Plc. didn’t realise major expansion either. However, in the first quarter of 2009 it successfully completed the transaction of selling its share in Öböl Invest Ltd. and this step greatly contributed to the company’s equity capital growing by HUF 2.3 billion and nearing HUF 30 billion. The other big event was selling the loan-financed, long-term Euro-denominated OTP Plc. bonds, but on this deal the company lost a considerable sum – however, by selling them it reduced by HUF 3.5 billion the loans it had to pay back to banks. In 2009 Arago kept the majority of stock exchange bonds it had acquired earlier.


Economic recession kept its effects felt in Hungary’s economy. Back in 2009 Arago commenced the procedure for selling Hunguest Hotels Plc. After negotiating with numerous international (Russian, Israeli, Swiss and Chinese) investors, finally part of it was sold within a large parcel-consolidation circle; although in the end the selling wasn’t successful, a Swiss investor joined the circle of owners by means of a capital increase. From the capital increase Hunguest Hotels bought two hotels. In the same year a capital increase was implemented in the Fűzvölgyi agricultural firm by purchasing bonds with various trading-purpose securities. In the second half of 2010 Arago acquired majority ownership in Diósgyőri Football Klub Ltd. Implementing the decision made by the previous year’s general assembly, the Board of Directors purchased 1.000 ‘A’-type voting preference shares (equity shares).


This year bring no positive change in the investment market either, in part due to the stagnation of the Hungarian economy. The country’s risk rating was high and selling various types of assets stayed difficult. There was no improvement in the lending sector either, banks’ decision making process slowed down and it also became difficult to get financing from the markets. Despite these conditions Arago’s financial management remained profitable and the company’s equity capital exceeded HUF 31 billion. As for liabilities, they almost exclusively originated from dividends payable to owners, just like in the previous year. The company’s economic, financial and liquidity situation could be considered exceptionally good.