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Startup Snapshots

John Wirth, MBA '98: Pensioner financing, Hungarian-style

John Wirth
John Wirth
In the early '90s, when he lived in Germany as an officer in the U.S. Army, John Wirth became spellbound by the history and culture of Central and Eastern Europe, and dreamed of starting up and owning a company there before he was 40. His dream is now reality: he is the founder and chief marketing officer as well as a board member of Hild Asset, Ltd., a pensioner services company headquartered in Budapest, Hungary.

"Pensioners were the ones who really lost out after Communism," says Wirth. "They had no private pension plans, stocks, bonds, or personal savings." Promises of support from governments evaporated, while purchasing power dwindled – in Hungary, by 3 percent per annum, and in Bulgaria by 7 percent annually. "So today people have only 38 percent of the purchasing power they had 15 years ago," says Wirth. "I saw huge opportunity."

When banks first came to Eastern Europe, they all did corporate banking, notes Wirth; retail banking only come into its own in the past five years. And nobody was looking at pensioner financing possibilities, such as property-backed life annuities.

"When a pensioner signs with us, we get the property title transferred to us," Wirth explains. "They receive, on average, a 20 to 25 percent lump sum value, then monthly income for the rest of their lives, whether they live ten or 40 years. We take over the property costs and capital improvements. If we fail to meet obligations, they get their title back.

"These pensioners have been lied to by everyone in their lives – through WWI, WWII, the transition to socialism, the 1956 revolution in Hungary, and the transition to a market economy," notes Wirth. "They've heard so many different stories, visions, and promises; they don't trust much."

To help build that trust, and in tribute to the service-to-society ideal Wirth internalized while in the Army, Hild Asset provides something unique for its clientele: a community center with a rich social environment. "Pensioners singing, karaoke, dancing lessons, kids singing songs – every day there's something going on here," says Wirth.

Hild Asset has offices in three cities in Hungary, and expanded into Bulgaria and Romania just this spring. Plans are to continue their regional expansion into Croatia and Poland. The company is backed by Deutsche Bank and just closed financing with Merrill Lynch, equity owners providing financing for Hild's contracts. "My company has now raised $100 million," reports Wirth.