Statement of the shareholder and founder of REDSIDE
Dear investors, dear business friends, my exceptional colleagues,
as the founder, spiritual father and sole shareholder in REDSIDE, I feel the need and obligation to comment on the future of our company, which, through no fault of its own, has found itself in a complex and paradoxical situation. On the one hand, it offers top-quality funds that generate excellent performance over the long term. On the other, it is facing the forced departure of investors, caused by the gradual collapse of the Arca group. This is something we had no part in and cannot influence in any way.
However, I want to tell you the whole story from the start, from when I established REDSIDE in 2014. I had already achieved great success in business, and had experience in the international investment environment and the real estate sector. All this led me to the ambition to create the largest and most successful real estate fund in the region—the future NOVA Real Estate.
My colleagues and I threw ourselves into it with extraordinary energy. We enjoyed it, it was fulfilling, and after the first five years it seemed that our aims were within our grasp. The NOVA Real Estate fund grew, prospered and had almost no competition at the same level. Gradually, new investors came, replacing the initial investment of our largest business partner, Arca Capital.
In addition, right at the start of our cooperation with Arca Capital, we took over the management of two small funds from the management company Avant: Arca Opportunity and NOVA Green Energy. Later, we also founded the NOVA Money Market fund, which offered investors the chance to invest in other Arca group activities, specifically the development of the Slovak company Silverside, which grew satisfactorily and gradually built up a client base and loan portfolio worth tens of millions of euros.
In addition to building a real estate portfolio in NRE, in the REDSIDE team we were also enthusiastic about energy, so we built our own expert team and gradually transformed the small NOVA Green Energy, which held a couple of receivables from the Arca group, into a market leader full of high-quality energy assets and new and ever more sophisticated projects.
At the start of 2020, my real estate team and I completed a multi-day tour of Poland, where we intended to buy a large portfolio of office buildings in a total of five Polish cities. At the same time, colleagues in the energy team were completing the acquisition of a photovoltaic power plant in Hungary with an installed capacity of 15 MWp and, at the same time, intensively working on another project, which was the construction of a photovoltaic power plant that was nearly twice as large. Both power plants in cooperation with Arca Capital. Why with them? Well, you remember? At that time it was a fast-growing financial group celebrated by the whole market, trusted not only by thousands of investors, but also by journalists, business partners and banks. And, of course, by me personally.
COVID-19 arrived in the spring of 2020 and financial problems soon began for the Arca group, becoming visible at the end of the first half of the year. It ended up in insolvency within a fe months with unpaid liabilities to thousands of creditors, including the NOVA Money Market fund we managed. Perhaps to complete the tragic image of the company’s collapse, the original shareholders started an undignified dispute over who was more at fault for the company’s failure.
At the start, I trusted that the quality of our funds, our professionalism, clear conscience and intentions were sufficient to free the healthy funds from the collapsed group’s influence, find new investors and continue to build. We accepted the never-ending inspections by regulators on probably every single asset owned by our funds with humility, as a natural reaction to the nervosity surrounding this “crash of the decade.”
I did not completely understand the countless attacks by the founder of Arca Capital, Pavol Krúpa, especially since I practically never worked with him on anything, but I was able to accept them as a kind of punishment for choosing the wrong business partner. In the last three years, practically not a month passed in which we did not spend a significant part of it responding to nonsensical and bullying lawsuits, equally bullying filings with the Czech National Bank and defamatory and slanderous e-mails sent to our business partners, as well as existing and potential investors.
The bullying has now climaxed with the filing of insolvency applications against the NOVA Money Market and NOVA Green Energy funds. Both based on fictitious receivables, precisely in the spirit of Krupa’s age-old modus operandi, which he likes to call “activist investing.” I do not want to comment on the motives that lead to such questionable behavior, but I am obliged to point out that we are progressively winning all the court cases. In all of them, including the— promptly rejected—insolvency application against the NOVA Green Energy fund, the courts are progressively finding we are in the right, and I am completely sure that we will also win all the other disputes brought by Krúpa and his colleagues.
Unfortunately, it is, however, time to openly admit that the shadow of the Arca group’s collapse has seriously impacted REDSIDE’s reputation. We now have no chance and no ambition to develop our funds, our business and seek to restore investors’ full confidence. Progressively for various reasons, but always related to Arca—we have had to close all the funds. At the same time, we strongly perceive that our investors want to liquidate their positions and get the money invested back. I respect that and understand it. Even though we manage successful and functioning funds, we cannot work in the collective investment industry without sufficient interest from investors.
Although I have spent the last three years with my wonderful and enthusiastic team trying to extract our business from the negative impacts of the Arca group’s collapse, and although I myself have invested the vast majority of the money I have earned in nine years at REDSIDE in our funds (excluding Arca Capital, I am by far the largest investor), I have decided to progressively terminate the activities of all the funds we manage, carefully liquidate their assets pay out the investors and finally “hand over our license” to the regulator.
My passion has always been to build, lead and create. I don’t want to and can’t spend my career, and especially my life, in nonsensical and dirty fights.
However, I am fully aware of my obligation to you, the investors, to take the best possible care of all the funds’ assets—your investments. My decision naturally does not mean that we will “down tools and go home” tomorrow. The funds managed by REDSIDE, meaning the investors, now own assets worth many billions. Their best possible liquidation is in the interests of all investors, not excluding myself, my family and many of my friends.
Therefore, at REDSIDE we will start to create and implement a suitable strategy for liquidating our funds. I am convinced that both large funds, NOVA Real Estate and NOVA Green Energy, own very valuable assets and that we, as their investors, need have no worries about the result of our investments. Nevertheless, the process of terminating the funds’ activities, including the correct timing of the liquidation of the portfolios with respect to the market situation, will still require a lot of work and some time. REDSIDE will soon inform you—and keep you informed— about the details of the liquidation plans.
Dear investors and business partners, I would like to thank you for the trust and frequent support from many of you, even in these difficult times. I appreciate it very much and also view it as something that places me under a strong obligation for the final stage of REDSIDE’s activity. In the same way, I would like to thank all my colleagues. You are a great team and it is you who kept me away from this unhappy decision for so long.
Best regards,
Rudolf Vřešťál
Founder and owner, REDSIDE
