Mr Babis’ anti-establishment ANO party will control 78 out of 200 seats in the Czech Republic’s lower house but still needs to find coalition partners to achieve a majority.
He is likely to discuss coalition prospects with the anti-EU, anti-immigration Freedom and Direct Democracy Party (SPD) after other parties said they would prefer to remain in opposition.
A coalition with the SPD would be bad news for the EU as it would almost certainly prevent further European integration for the Czech Republic.
Both the APO and SPD are vehemently anti-immigration, so the coalition would also be bad news for EU freedom of movement.
After Brexit, the Austrian election last week, and the Catalan secession crisis, this could be the latest in a string of alarming upsets that have disturbed the liberal EU consensus.
Mr Babis, the second-richest Czech who has been compared to other tycoons-turned-politicians such as Donald Trump and Silvio Berlusconi, has been rejected by mainstream parties despite his emphatic election win.
The centre-right Civic Democrats, who came second in the election with 25 seats in the parliament, said they would remain in opposition rather than enter into coalition with Mr Babis’ APO.
Smaller centre-right party STAN also refused to work with the new PM. STAN leader Jan Farsky said: “I can’t legitimise him and create the appearance of normality.
“Democratic forces got trounced but they will not regain strength by cooperation with Babis. That would finish them off.”
Opponents see Mr Babis as a danger to democracy due to his business and media interests, which they say are incompatible with holding high office.
Many are also reluctant to ally themselves with the new Prime Minister while he fights off fraud charges.
Police allege he hid ownership of one of his companies 10 years ago in order to profit from a €2 million EU subsidy intended for small businesses. He denies the charges.
However while Mr Babis is short on mainstream would-be coalition partners he can still ally himself with the SPD to form an effective government.
He is to meet with Czech President Milos Zeman on Monday to discuss a timeframe for coalition talks, and when he will be formally appointed as PM.