Hungarian companies and business magnates, who built vast business empires thanks to close ties to Viktor Orban, are turning to smaller projects as the new ruling party seeks to put an end to alleged cronyism.
Reuters spoke to a dozen former officials, company representatives and analysts who said billionaires in Orban's inner circle are reassessing their businesses after Prime Minister Péter Magyar won an election in April to end Orban's 16-year rule. Some companies, the analysts said, without naming them, are unlikely to survive in the new circumstances.
“We have to and we want to adapt,” Sandor Szer, founder and CEO of Market Epite, one of Hungary’s largest construction companies, told Reuters. The company, linked to Orban ally and businessman Istvan Garanci, makes a quarter of its revenue from public contracts, including the construction of famous football stadiums.
"We are preparing for changes in which, instead of large projects, there will be more smaller jobs, while housing and infrastructure construction will become dominant activities."
These strategic changes represent the biggest shake-up in the Hungarian economy in decades. While they are driving down the share prices of companies associated with Orban, they are also creating a more competitive business environment that could encourage greater investment from foreign companies.
Analysts believe that the companies that were dependent on public infrastructure projects, and which will now fight with new competitors for a share of state money, are most at risk.
“Construction companies and road construction companies that were part of those networks will disappear in a year or two, as the jobs will be awarded to other firms,” said Daniel Hegedus, deputy director of the Berlin-based Institute for European Policy.
The company "Market Epite" says that three decades of successful business and their financial strength have not depended on political cycles, and that their diverse portfolio provides stability.
Orban's allies survive: We are not afraid
During Orban's rule, his allies used preferential access to state spending, public tenders, and favorable regulations to take over companies and expand their operations across Hungary.
A 2024 study by the Organization for Economic Cooperation and Development (OECD) found that Hungary had a high number of public procurement procedures in which there was only one bidder. The European Union, as part of a broader package of conditions for unfreezing suspended funds, has called for reforms aimed at strengthening market competition.
Research by the Hungarian anti-corruption institute CRCB, published just before the April elections, showed what the organization described as “clear evidence of political favoritism” in public procurement procedures.
New Prime Minister Peter Magyar, who defeated Orban in a landslide election victory, submitted a comprehensive package of anti-corruption laws to parliament in June as Budapest seeks to meet European Union requirements for more transparent use of public money.
The Hungarian government did not respond to Reuters' request for comment.
In another sign of major changes, the Hungarian parliament passed a constitutional amendment on July 13th that removed President Tamas Sulyok, whom Hungarians call a “puppet” of former Prime Minister Orban. Sulyok has denied the accusations, saying he had no political agenda.
Orban's departure left visible consequences on the market.
Companies considered politically connected, such as construction and energy conglomerate Opus Global, real estate company Apenin, telecommunications firm 4iG and MBH Bank, saw their shares fall sharply as investors assessed that their value was partly based on political influence.
At the same time, these companies have failed to keep up with the rise in share prices on the Budapest Stock Exchange, fueled by investor expectations that Hungary will create more favorable conditions for business. The new prime minister has announced a review of contracts in areas such as construction, defense and media.
Duna Asfalt, whose billionaire owner Laszlo Szijjártó transformed a small business into Hungary's leading road construction company during the rule of Orban's Fidesz, said it would rely on its experience to remain competitive.
"Even before 1990, 'Duna Asfalt' competed in a market dominated by international companies," the company said in response to questions from Reuters. "We are well aware of such an environment and we are not afraid of it."
“Some of these companies will disappear”
As part of a review of budget commitments made during Orban's rule, the Hungarian government announced that it would suspend the expansion of a section of the highway in southern Hungary and called on the company "Duna Asfalt" to return the money it received for the project before the election.
Duna Asfalt did not respond to an email from Reuters requesting additional comment on the contract related to the construction of the highway.
4iG rejected in an email claims that it benefited from political favoritism, while MBH, Hungary's second-largest bank, said it operates in accordance with Hungarian and European public procurement regulations.
Opus Global and Apennine did not immediately respond to Reuters requests for comment.
More transparent tenders could open up more space for international companies and displace some of the companies linked to Orban, believes Oršolja Račová, an analyst at the company "Evroazija Group".
"I expect big changes and I think some of these companies will disappear," she told Reuters.
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