“When the change happened, I was in the first year at the University of Economics. We started with Marx and we finished with Adam Smith.”
Ivo Prokopiev is one of the most successful businessmen in Bulgaria. He is co-owner, chairman of the management board and CEO of Alfa Finance Holding, a quickly expanding holding company covering businesses in real estate development and construction, the extraction of industrial minerals and financial services. He is also co-owner and chairman of the board of directors of Economedia AD, the second largest publishing group in Bulgaria (publishing the quality daily Dnevnik and the Bulgaria’s leading weekly Kapital). Prokopiev also chairs the Bulgarian Confederation of Employers and Industrialists.
Prokopiev was born in the early 1970s in Razgrad, a provincial town of some 40,000 inhabitants in the North-East of Bulgaria with a substantial Turkish minority population of 27 percent. When he turned 18, he moved to Sofia to study. That was in 1989.
“I was lucky to belong to the first generation that was mature enough, but on the other hand not damaged from the old system. So, when the change happened, I was in the first year at the University of Economics. We started with Marx and we finished with Adam Smith. So that was a very strange year, ’89 and the beginning of ’90. (…)
I was quite good in mathematics, but I didn’t want to go to Sofia University to study mathematics, because I had a clear idea what I wanted. At that time the Perestroika had already started. So there was an inflow of progressive ideas from Russia. In that time, 1989, reforms were more advanced in Russia than in Bulgaria.
So, Russia was a source for new ideas. We were not allowed to read Western newspapers, but we could read Russian newspapers. And through Russian newspapers we started to get an idea what will happen. And having that sense, from ‘Literaturnaya Gazeta’ and other papers, I decided to become a manager. And that’s why I applied for economics. I wanted to become manager of a government company, because there were no private ones… [laughs].”
Ivo Prokopiev’s first job, however, was that of an economics reporter. As a student of finance, he started writing for the newly founded economic daily “Pari” (money), which still exists and is now owned by the Swedish Group Bonnier.
“After one year, when the place was a little small for me, together with my partner we decided to start our own newspaper. We started ‘Banker’, which also still exists, a very nice niche product for the banking industry. And then ‘Kapital’ came very naturally, because we sold ‘Banker’ and invested the money in ‘Kapital’, which was a little broader than ‘Banker’, covering – apart of finance and business – also political issues and transition issues.
An important element of the early beginning was a partnership agreement with Reuters. At that time, Reuters was in very good shape, globally, and they wanted to have a big office in Bulgaria, but not having too much people on the payroll, so doing a weekly was a perfect fit with their need, because in the meantime our people were servicing as Reuters stringers. And that’s how we developed. That partnership, of course, gave us access to their archives, international stories, and it gave us a sense of quality. Most of our people were trained at the Reuters Foundation.”
At the time, the Bulgarian economy was in serious trouble. Transition after the demise of communism was not off to a good start. Privatisation had not yet taken off, banks were decapitalised, the free market was not really functioning, and unscrupulous criminals were launching financial pyramid schemes. There was a need for reliable financial and economic information.
“Actually, fighting pyramid schemes was the first and probably the most important positioning of the paper, an important public fight which we won. We managed to show to the public how empty all these structures are, and that they will never perform according to their promises. That was before the banking crisis; it was the first significant financial turbulence in Bulgaria, uncovered by ‘Kapital’, not by the banking supervisory department. By the newspaper, and people started to trust it. For the newspaper business the trust and public confidence is the most important element of brand identity. If you have it, you’re in the business – if you don’t have it, do something else, but not in the newspaper business.”
In the mid-1990s, Prokopiev started to do consultancy work for investors and financial businesses. Later on, he and two local partners started to invest in emerging markets. In the late 1990s, however – after the crisis in Russia, during which they lost a lot of money, and after Bulgaria’s domestic economy began to pick up – they began to invest back home. Prokopiev has a unique way of looking at Bulgaria’s 1997 economic crisis.
“For Bulgarian society, it was very healthy to face that reality. I’m sad to say that, but the memory of hyperinflation and fiscal discipline is still the main driving force for reforms in Bulgaria. After that very deep economic crisis, in which 40% of the deposits in the banking sector were lost, GDP declined I think 16-17% in one year. It was very painful, economically, but on the other hand, we had a solid base afterwards to start with the real transition. And, of course, governments after that missed a lot of opportunities, but generally they did well. Not very good, but they did well. So they managed to meet the number one and number two key foreign policy priorities for the country, being members of NATO and members of the European Union.”
During this period Prokopiev gave up his active role in Mediagroup and focused on developing a brokerage and financial consulting company. In 1999, he co-founded Alfa Finance AD, which became a holding company a year later. That same year, thanks to privatisation, Alfa acquired Kaolin, a major producer of industrial minerals. Further acquisitions and investments followed, particularly in real estate. By 2007, Alfa Finance Holding had 3,500 employees and was worth EUR 334 million. In terms of value, real estate has become the biggest part of the group.
This dramatic expansion would not have been possible without skills, luck, and the preparedness to take big risks. Ivo Prokopiev, who never lived abroad, is a natural born risk-taker.
“I would prefer to take ten decisions, out of them two, three wrong, but still the other seven which are right compensating the three that are not. Instead of, you know, taking just two, but being certain that every time you take the right one. (…)
Dynamism is our culture, the change, the speed is what drives us, and we clearly understand that we don’t have other chances. We have a momentum, the window of opportunity for, I may say, 2 to 3, 2 to 4 years from now. In that period we still have comparative advantages of being locals with access to capital. After that period, the big ones will come, and will just buy the marketplace. And then we have to do something else.”