• David Grammig

Former National Champion & WTA Winner Agata Baranska On Leaving Tennis And Investing In Poland

Updated: May 8, 2020

Agata Baranska is a former professional tennis player from Poland, participant and winner of many international WTA tournaments and a national champion. After she quit her tennis career she was responsible for the the private equity & real estate investments at a Polish family office. In the meanwhile she relocated to Monaco where she is co-founder of Undique Capital, an investment platform for international investors interested in the Polish market.

1.) You won several WTA tournaments and you were national champion in Poland. In the year 2016 at the young age of only 21 you ended your career. Why was that?

My decision to quit tennis resulted from my shoulder injury in combination with doubts about the future of my career in tennis. I had toyed with the idea to quit tennis, as I knew at one point, that there was no future for me in this.

But as a professional athlete a drastic change isn’t easily undertaken. In the end, it was my interest in the world of investment and finance that gave me the last push and, looking back, I now know it was the right decision to go for a career change.

2.) Do you feel that professional sports and finance have anything in common at all?

Absolutely, to be successful,l both in sports and finance you have to be competitive and love a good challenge. I would say finance is not much different from professional sports, which is why you see many financial institutions recruiting candidates with successful sports backgrounds. Determination, work ethic and perseverance are key for athletes and professionals in finance alike.

The difference I see between sports and finance – and other professions indeed – is the intellectual aspect. Athletes live in a bubble and I believe they miss out on a lot that is to be learned out there, as they need to stay focused and distraction from daily routines isn’t welcomed.

3.) You are a private investor and the co-founder of Undique Capital. Does sports play an important role in your investment decisions - whether as an asset class or with regards to your fighting spirit as a sports person?

I wouldn’t say so, no. Besides your personal qualities that you need in any competitive environment, the world of investment is more sophisticated than professional sports. Making a decision in business can take a lot of time and requires diligence and scrutiny. Making a decision in sports takes a split second. In business you base your decision on facts, numbers and analyses – and sometimes a bit of gut feeling, but in sports you don’t have that. And lastly, an investment might take years to pay off, but in tennis you see the result immediately. Point won. Or point lost. In sport, you want to see improvement and results from week to week, from tournament to tournament. Tennis is dynamic and agile; it is more like trading rather than making the investment decision.

4.) Undique Capital facilitates access to the Polish market. What’s so special about Poland and its investment opportunities?

Undique Capital acts as a platform for foreign investors to enter the market or simply provide access to lucrative investment opportunities - we build a pipeline of projects, in real estate and private equity, that may be hard to find by outside investors. The basic thought is that Poland is not too different anymore from Western countries, but it provides higher returns. Poland has an educated population – it ranks 5th among OECD countries in terms of academic achievement - with still relatively low labour costs. Poland is one of the most attractive destinations for international students. Cities, such as Cracow, have been growing due to the inflow of international students, creating an attractive environment for real estate, and encouraging foreign businesses.

It has been 31 years since the fall of Communism in Poland, so there are still plenty of unexploited opportunities, simultaneously, Capitalism is not a foreign concept to us – we were a fully capitalist market prior the two world wars.

5.) Where do you see Poland compared to its Central and Eastern European neighbors?

The CEE market offers 200 million customers, Poland being by far the largest market of the region, as well as largest recipient of EU funds. In 2018, Poland has been named a developed market, as the only one among the former Eastern Bloc. Furthermore, according to numerous indices that measure competitiveness and social progress, Poland is second only to the Czech Republic. That is because the Czech economy is, for the most part, mature and industrialized. It has the lowest investment risk in the region, but potential investors have to keep in mind that Poland's GDP growth is twice as high. In addition to that, Poland's institutions, regulations and social progress are rated much higher than its CEE counterparts. Lastly, marginal capital productivity in Poland is almost 4 times higher than in the Euro zone and higher than in Slovakia, the Czech Republic and Hungary.

6.) Do you think the political discourse in Poland is harmful to attracting foreign investors?

Poland as a member of the EU is a signatory to the agreements protecting capital investments of Investors from outside its borders. Any disputes in this matter shall be settled in accordance with the rules before arbitration courts. Until now, there were not many cases, and, to my knowledge, they ended in a final verdict against the Polish state. A striking example is the issue of Swiss franc loan portfolio. The current authorities more than 4 years ago announced that they would adopt a law that would be non-ruffle for banks, which would convert these loans into the Polish currency based on historical F/X rate. As a consequence, the announcements ended and the decisions on the legality of the contracts were taken by the Court of Justice in Luxembourg in favor of consumers, who are now effectively claiming their rights before Polish courts. To sum up, the Polish and European legal systems protect the interests of every type of investor.

I understand there is still a lot of skepticism towards Poland, especially from Western countries, but the matter of the fact is the course of politics has not been mirrored in the economy, and this is what is attracting investors. Poland is the only country in the world that has an uninterrupted high growth averaging to 4.2% p.a. for 27 years, since 1992. We have had a rather healthy and resilient economy, even during economic crises, like the one in 2008/09, where the real estate market kept stable - as the only one of all EU countries. All of this speaks for itself.

7.) What can Poland learn from its Western neighbors, especially with regards to its financial system, regulation and investment framework? 

Poland, although not a member of the monetary union, fully implements the ECB's recommendations through the actions of the Polish regulator, which is considered one of the more professional in Europe. A perfect example is the effect of the financial crisis of 2008/09, which has infected financial systems in many countries through "toxic assets" linked to US mortgages. This problem did not concern Poland because the banking system did not invest in such assets due to the local recommendations of the Polish regulator. In turn, the effect of this crisis was the debt crisis of some countries, including Greece. Again, Poland is doing quite well against this background, because we have a constitution that does not allow the government to exceed the debt level above 55% of GDP. This is a very good fuse that guarantees the sustainability of public finances. In the period before Covid-19, this ratio was around 48%.

As to Poland’s stock market, there is much need for improvement. In 2019 shares in Polish companies were among the world’s worst performers, with the WIG20 down 6%, compared to the Stoxx Europe 600 up 23%. Liquidity is at a low, as investors opt for private equity and real estate, that offer far greater returns. This is causing the IPO market to be the worst in two decades. Delisting’s actually outnumbered IPO’s in all of the past 3 years. I mean, we are talking to owners who prefer to list their companies in Frankfurt rather than in their home country, that should ring a bell. In Poland there is a lack of financial culture, like we see it in the west, for private households to participate in the stock market, it just simply does not exist. A government program to boost pension savings might provide some inflow, but even those would be allocated to private markets. Truth of the matter is, the availability of quality investment targets in the Polish Stock exchanges is limited, it would need new ‘’stories’’.

8.) When you speak to Polish private investors, what are in your opinion the challenges they face?

The first thing that comes to my mind is the availability of financing for smaller projects, I am talking about developments, redevelopments, bridging loans etc. Banks, for the most part, finance larger projects from €25M+. Investors with projects under this level have to turn to private debt providers, such as Cremona Private Debt – a real asset-backed private debt fund, which we are about to finalize.

Second, Investors are forced to go into private markets for attractive yields, since the Polish stock market doesn’t offer much of interesting opportunities, as previously mentioned.

Third and last, international competition is starting to mount in most of the Polish tier 1 cities, with the best opportunities being absorbed immediately. Investors need to have available liquidity and act fast, in order not to miss out.

9.) What’s the preferred destination outside of Poland for private wealth owners to invest and why?

Actually, when it comes to polish wealth, they like to invest at home. In Poland. This is a market they know very well, where they have established connections, deal flow, and it’s a market they feel most comfortable with. Furthermore, their wealth is denominated in polish zloty, making foreign investment subject to currency risks. For those Polish investors who invest abroad and have built large, above-average cash positions, they most often invest through Swiss banks in debt securities and partly in company shares outside of Poland.

Agata Baranska will attend and speak at the Central & Eastern European Wealth Summit in Vienna, Austria on the 03 December 2020. Connect to event's LinkedIn page.

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