In 2025, the beneficiary of Dragon Capital Investments Limited, Tomas Fiala, will start construction of a new plant for the production of Truskavetska mineral water in Lviv region with a capacity of 1 million bottles per day, which will allow Truskavetska to approach the capacity of the market leader Morshynska and overtake Karpatska Dzherelna, Forbes Ukraine reports.
According to the report, the investment company Fiala is already designing a new plant for the production of Truskavetska. Prior to that, it acquired two existing producers of this brand. The reason for the construction of the new plant is the inability to increase the existing capacity.
The new mineral water plant will be located on the territory of the Bobernia tract, next to the Solonytsia River, which flows into the Truskavets Reservoir. The plant will occupy an area of 20 hectares, but the final size of the site will depend on the results of the design. The production will be located near the Truskavets Ring Road.
“It’s good for logistics,” Fiala said, adding that the Aqua-Eco plant, which is already owned by Dragon Capital, is located nearby.
The company does not disclose the amount of future investments. “They amount to more than EUR35 million in the plant,” said Andriy Kulchynsky, mayor of Truskavets.
According to Serhiy Ustenko, owner of Carpathian Mineral Waters, the amount will be more modest – about EUR20 million.
For the company, such an investment is very significant, as the total revenue of Aqua-Eco LLC and Firm T.S.B. LLC in 2023 amounted to UAH 487.9 million. At the same time, only Firm T.S.B. LLC made a net profit of – UAH 6.7 million, the publication cited data from the YouControl service.
The company with foreign direct investment, Aqua-Eco LLC, is engaged in bottling mineral table water under the brands Truskavetska Aqua-Eco, Truskavetska Kryshtaleva, and Truskavetska Zapovedna. Since 1827, Truskavetska natural mineral water has been produced from the wells of the landscape reserve in the resort of Truskavets, Lviv region.
As reported, in August 2021, the Antimonopoly Committee of Ukraine (AMCU) allowed Dragon Capital Investments Limited (Nicosia, Cyprus) to buy Frolovia Limited (Nicosia, Cyprus), which owns the Truskavets Mineral Water Plant (Aqua-Eco LLC) in Ukraine, which bottles mineral water under the Truskavetska brand.
According to the website of IDS Borjomi Ukraine, as of August 2021, the group of companies included the Morshyn Mineral Water Plant Oscar and Truskavets Mineral Water Plant (both in Lviv region), Myrhorod Mineral Water Plant (Poltava region), IDS Aqua Service distribution company, and the Holoprystan Plant of Nova Kom (Kherson region).
Dragon Capital Investments Limited is a part of the Dragon Capital group of companies, the ultimate beneficiary of which is businessman Tomas Fiala.
Dragon Capital is one of the largest investment groups in Ukraine in the field of investment and financial services, providing a full range of investment banking and brokerage services, private equity, asset management for institutional, corporate and private clients. The company was founded in 2000 in Kyiv. One of Dragon Capital’s key business areas is real estate investments.
CONSTRUCTION, DRAGON CAPITAL, LVIV REGION, PLANT, Truskavetska
Dragon Capital Investment Group has revised its forecast for the average annual hryvnia exchange rate in 2024 from 37.3 UAH/$1 to 40 UAH/$1, and the exchange rate at the end of the year from 39.0 UAH/$1 to 42.0 UAH/$1, but maintained its GDP growth forecast at 4.0%.
“We expect the hryvnia to continue to weaken against the US dollar in a controlled manner. We have revised our forecast due to the change in the National Bank’s approach to managing the exchange rate in early 2024,” the group said in a press release on Tuesday.
According to Dragon Capital’s updated estimates, external financial support for Ukraine’s budget from partners this year will amount to $37 billion and will support the economy’s resilience.
“Although the approval of the support packages has been significantly delayed and the total amount of funding will be slightly less than we expected ($40 billion), these funds will be sufficient to keep the NBU reserves at current record levels around the current record $43 billion (previous forecast – $45 billion) and to finance the budget deficit without issuing,” the release says.
However, the investment group adds, the budget situation remains tense and will require mobilization of internal resources. The law on the state budget for 2024 needs to be significantly revised, as the defense and security expenditures envisaged in it are clearly not enough to adequately finance the army throughout the year.
“The updated law should also take into account the impact of increased mobilization, which, according to our estimates, will cost the budget of all levels $1.5-2.0 billion (including the indirect impact on revenues). In general, military spending in the general fund of the state budget will need to be increased by at least $9 billion to keep it at the level of last year,” Dragon Capital believes.
At the same time, the company believes that this increase can be partially financed by reducing non-military expenditures (for example, to service external commercial debt after its restructuring) and additional revenues (tax on unexpected bank profits, increased transfers from the NBU, and increased excise rates on fuel).
In general, the investment group expects the government to slightly reduce the public administration budget deficit this year to about UAH 1.6 trillion from UAH 1.7 trillion last year (excluding grants) due to an organic increase in tax revenues from economic growth, additional measures to fill the budget revenue side and a restrained approach to non-defense spending.
“The hryvnia depreciation will not have a decisive impact on the budget deficit dynamics, as part of the military spending is directed to the purchase of imported goods and compensates for tax revenues that depend on the hryvnia exchange rate. However, a weaker hryvnia helps to reduce the need to finance the budget deficit with domestic borrowing, as it increases the hryvnia equivalent of international aid,” the press release said.
At the same time, the revision of the exchange rate forecast led to a decrease in estimates of Ukraine’s nominal GDP this year to $190 billion from $201 billion and an increase in the forecast of public debt at the end of the year from 85% of GDP to 92% of GDP, although in absolute terms the forecast was raised slightly – from $164 billion to $166 billion.
Dragon Capital assumes that the NBU will change its approach to managing the exchange rate in accordance with its own assessment of the balance of risks to financial stability. At the same time, the record level of international reserves will allow the central bank to continue to keep the situation in the foreign exchange market under control and avoid uncontrolled devaluation, provided that domestic economic policy is aimed at maintaining macroeconomic stability and international partners continue to provide financial support in the minimum necessary amounts, the investment group emphasized.
Given the slowdown in inflation and stable inflation expectations, moderate devaluation does not pose risks to macrofinancial stability, but supports export competitiveness, helps the budget by reducing funding needs, and reduces the loss of reserves from the initial effects of currency liberalization, Dragon Capital believes.
“We expect that the NBU will take a balanced approach to determining the further dynamics of the hryvnia exchange rate, as the population’s sentiment remains vulnerable in the context of the war, and it is unlikely to determine the equilibrium level of the exchange rate using standard methods given the specifics of the balance of payments structure caused by the war,” the press release said.
According to it, the inflation forecast for 2024 has been improved from 8% to 7.6%, and the discount rate at the end of the year has been reduced to 13% from 15%.
The investment group explained that the forecast of GDP growth in 2024 by 4.0% was maintained by the recovery of exports by seaports and the development of the military-industrial complex, which will be the main drivers of economic growth this year and will outweigh the negative impact of increased mobilization and electricity shortages, assuming that the authorities will be able to organize mobilization in such a way as to limit the negative impact on business.
“According to our estimates, given the existing capacity of the power grid and current import opportunities, the electricity shortage will be quite moderate in summer and autumn, which will allow enterprises in most industries to maintain production volumes at levels close to current levels and therefore increase them compared to 2023,” the investment group believes. The growth will be especially noticeable in sectors that were depressed due to the lack of maritime exports, namely ore production, metallurgy, and cargo transportation, Dragon Capital added.
The company also predicts that thanks to the resumption of seaports and a larger-than-expected agricultural harvest last year, exports of major commodities will grow by 35% to 109 million tons this year, which will help keep the foreign trade deficit from widening further (its estimate has been reduced to $29.0 billion from $32.9 billion), despite rising imports and lower global agricultural prices.
Kherson-based Gistion LLC is the new owner of Amtel. The Antimonopoly Committee of Ukraine granted Histion permission to acquire Amtel through the purchase of the International Logistics Company in November 2023. The change of ownership took place in March 2024.
Dragon Capital did not disclose the amount of the deal. According to Forbes, based on these estimates, the total cost of the logistics complex could have been $35-40 million. A source familiar with the deal notes that this figure is not true and that the deal is much higher.
Amtel is a Class A logistics complex with a total area of 100,208 square meters. It was the largest property in Dragon Capital’s portfolio.
The founders of Histion are Oleg Lebedenko and Gennady Girin. The entrepreneurs own the New Style Door Factory trademark.
Girin is the CEO of the 33 m² chain, which unites 25 construction supermarkets. He also owns the company’s trademark and a stake in the Suvorovskiy shopping center in Kherson. Lebedenko owns the Betonera building materials trademark.
Before the full-scale war, Dragon Capital Group owned 778,000 square meters. Now it owns about 531,000 square meters of commercial real estate: during the war, the company lost three properties and sold three more.
In addition to the sale of Amtel, in 2022-2023, the group found new owners for two office centers in Kyiv.
The office center on Dilova Street in Kyiv was acquired by the Red Cross Society of Ukraine, according to the State Register of Real Property Rights.
In 2023, Soft Construct Limited bought the Seasons of the Year business center. Its beneficiaries are Armenian citizens Vigen and Vage Badalyan. They are co-owners of the global gambling software developer BetConstruct. In December 2022, they withdrew from the co-founders of the bookmaker Bbet Ukraine, according to YouControl data.
Dragon Capital investment company, taking into account the increase in exports of raw materials through the sea corridor, a stable energy situation and a good harvest, improved its forecast for economic growth in 2023 from 4.5% to 5.2%, but kept it at 4% for 2024, the company said in a press release on Friday.
“Our updated estimate is that real GDP will grow 5.0% year-over-year in the fourth quarter of 2023, from the 3.0% we previously estimated,” the company said in a statement.
Its analysts estimate that Ukraine exported about 4 million tonnes of commodities through the new sea corridor in November, from 2 million tonnes in October. At the same time, agricultural goods accounted for about 60-70%, and the remaining share was occupied by the export of iron ore and steel. This dynamics contributes to the revitalization of related sectors, in particular freight transportation and trade, contributes to the recovery of ore production and metallurgy products, and also improves the financial indicators of agricultural enterprises, reducing risks to the harvest in 2024.
Dragon Capital, taking into account the latest data on yields of major agricultural crops, has improved its expectations for the harvest of grains and oilseeds this year from 77 million tonnes to 80 million tonnes (11% more year-over-year).
At the same time, the investment company said that an unexpected and unfavorable event was the blockade of the main crossing points of the Ukrainian-Polish border by Polish truckers in early November, which will have a limited adverse impact on economic activity.
Among the downsides of the blockade of the Ukrainian-Polish border are a decrease in state budget receipts, losses for manufacturers oriented towards the EU market, mainly in the food industry, woodworking and production of automotive electronics, a shortage of certain energy materials such as LPG, a delay in volunteer assistance for the front and financial losses of enterprises due to queues.
At the same time, Dragon Capital said, since the import of goods from the EU to Ukraine by road exceeds exports by $1.1 billion per month, the blockade leads to a reduction in the foreign trade deficit, which in recent months has fluctuated in the range of $2.8-3.0 billion per month.
“Due to the reduction in imports, some Ukrainian manufacturers of consumer goods are gaining a temporary competitive advantage,” the company added.
Speaking about the 4% forecast for economic growth next year, Dragon Capital named the partial restoration of exports by seaports as one of its key drivers and, accordingly, an increase in production in related sectors (ore mining, metallurgy, freight transportation, domestic trade). “The development of the domestic defense industry would also contribute to the economy,” the company said.
At the same time, the investment company said that economic recovery in 2023-2024 will not compensate for the 29% decline in 2022 caused by the consequences of the full-scale Russian invasion of Ukraine, and real GDP in 2024 will remain 22% below its pre-war level.
“At the same time, nominal GDP in U.S. dollars could reach its pre-war level of $200 billion as early as next year due to relative exchange rate stability and high average annual inflation,” Dragon Capital said in the press release.
The company maintained its inflation forecast for this and next years at 6% and 8%, respectively, with the National Bank’s key policy rate unchanged at 15% after its expected reduction from 16% at the next meeting on December 14.
Dragon Capital also noted the importance of financial assistance from partners, pointing out that if there is a shortage, the government will have to turn to monetization of the budget deficit, which will decrease next year from 25% of GDP to 21% of GDP, or to increase the tax burden.
“We expect international partners to approve new economic support packages for Ukraine and provide about $40 billion in direct budget funding in 2024, although a delay in the release of funds is possible early next year,” the company said.
The company’s analysts expect that, subject to such external revenues, the National Bank’s gold and foreign exchange reserves will begin to gradually grow and reach $45 billion by the end of the year.
Dragon Capital kept its exchange rate expectations unchanged – UAH 37.30/$1 on average for 2024 and UAH 39.00/$1 at the end of the year.
Dragon Capital investment company, one of the leading players on the Ukrainian market, forecasts real gross domestic product (GDP) growth of 3 percent in 2023, while previously it had expected a decline of 0.5 percent.
“We have already improved our forecast: we expect GDP growth of 3% this year,” the company’s founder and head Tomas Fiala said in an interview on Radio NV.
He said power outages have already stopped since mid-February, and economic results in recent months have been better than expected.
“And we hope the economy will grow, perhaps even more than 3 percent,” Fiala added.
Dragon Capital told Interfax-Ukraine that rate and inflation forecasts will also be updated soon.
Fiala noted that Ukraine’s nominal GDP in dollars fell to $160 billion in 2022 from $200 billion in 2021.
“This is the best figure in the last 10 years, more was only in 2021: GDP was $157 billion in 2020 and $160 billion in 2022,” the head of Dragon Capital said.
As reported, Ukrainian Finance Minister Sergei Marchenko late last week said he raised Ukraine’s GDP growth forecast for 2023 to 3.2%, while previously the government had estimated it at 1%, and the National Bank recently improved it from 0.3% to 2%.
Investment group Dragon Capital intends to buy Parfums LLC (Kiev), an online perfume store Parfums (parfums.ua), whose revenue in 2022, according to the resource opendatabot, fell to 2.4 million UAH from 206.8 million UAH a year earlier.
According to information from the Antimonopoly Committee of Ukraine (AMCU) on Friday, it gave the Cypriot Dragon Capital Investments Limited permission to buy more than 50% in the Cypriot PFG Corporation Limited, which owns 100% in Parfums LLC and the beneficiary of which is related to Dragon Capital.
At the same time, the AMCU notified that it had granted the same permission to Cyprus-based Redinfine Consultants Limited.
Dragon Capital investment company has not yet commented on this information to Interfax-Ukraine news agency.
According to opendatabot, the beneficiary of PFG Corporation Limited is a Czech citizen Suchy Ivo, a member of the supervisory board of Dragon Capital-owned Unex Bank, representing the shareholder. It is also indicated that for the past five years he was executive director of Dragon Capital (Cyprus) Limited and Dragon Capital s.r.o.
According to opendatabot, previously among the beneficiaries of PFG Corruption Limited was Andrey Logvin – the beneficiary of a major player in Ukrainian Internet retail Kasta Group.
At the beginning of 2022, the share capital of Parfums LLC was increased from 133.72 million UAH to 177.80 million UAH. Assets of the company in the past year decreased from 106.4 million UAH to 81.5 million UAH, liabilities – from 167.8 million UAH to 98.5 million UAH.
The site of the online store indicates that the project has been operating since 2008.
Dragon Capital – one of the largest investment groups in Ukraine in the field of investment and financial services. It provides a full range of investment banking and brokerage services, private equity and asset management for institutional, corporate and private clients.
The company was founded in 2000 in Kiev, the beneficiary is the founder and head Czech citizen Tomas Fiala.
In June 2022, specialized resource RAU reported that as a result of an asset swap the largest player in the market of perfumes and cosmetics in Ukraine MakeUp will receive from Dragon Capital management of online store parfums.ua, but will give it an online store with children’s products panama.ua to the already existing Dragon Capital pampik.com.
