Real growth of Ukraine’s GDP in 2020 would accelerate to 4% from 3.2-3.3% in 2019 with a flight rise in inflation from 4.1% to 5.2%, Dragon Capital Investment Company (Kyiv) has said. “Now the situation is very good in Ukraine, one of the best for 20 years of our stay here,” Tomas Fiala, the head and founder of the company, said at the presentation of the macroeconomic forecast of the European Business Association (EBA) in Kyiv.
According to him, in 2021, the company expects a slight slowdown, to 3.7% with inflation of 6.1%.
Fiala said that Dragon Capital predicts that the hryvnia will strengthen this year on average to UAH 24/$1 compared to UAH 25.80/$1 last year.
He added that, according to the company’s expectations, the exchange rate at the end of this year will be about UAH 24/$1, and at the end of the next – UAH 25.5/$1.
According to Fiala, such an economic growth with the hryvnia strengthening has already increased its U.S. dollar-pegged GDP from $90 billion in 2015 to $150 billion in 2019 and, tentatively, to $175 billion this year.
He said that this allowed reducing public debt from 80% of GDP to 51% of GDP and allows us to expect an increase in the credit rating of Ukraine by another 1-2 points in 2020.
The head of Dragon Capital said that among the main risks for the forecast is the refusal to cooperate with the International Monetary Fund (IMF), which is extremely dangerous in the conditions of Ukraine’s dependence on external financing and the deterioration of the global situation, especially in the grain and metal markets.
The Antimonopoly Committee of Ukraine (AMC) has allowed the Cyprus company Dragon Capital Investments Limited to acquire a controlling stake in Idea Bank (Lviv) in the amount of 193,318 shares, which is 64.7106% of the total number of shares of the bank, the press service of the AMC has told Interfax-Ukraine.
As reported, Poland’s Getin Holding S.A. on December 20, 2019 signed an agreement on the sale of 100% of the shares of Ukraine’s Idea Bank and 100% of New Finance Service LLC (Kyiv) to a group consisting of Dragon Capital Investments Limited (Cyprus), Dragon Capital New Ukraine Fund L.P. and an individual.
According to a report by Getin Holding on the Warsaw Stock Exchange, the purchase price in euros is equivalent to UAH 1.368 billion, or PLN224.76 million, excluding the amount of dividends before closing the transaction and the price of 100% participation in New Finance Service of about UAH 5 million. The price can also be reduced as a result of negotiations between the parties after an independent auditor prepares a report, the document says.
According to him, it is expected that the transaction could be completed before May 31, 2020.
Getin Holding in October 2019 put Idea Bank up for sale. On October 22 it announced the signing of a letter of intent with the Direct Investment Fund.
Idea Bank (formerly Plus Bank) was founded in 1989.
Idea Bank ranked 24th out of 76 operating banks as of October 1, 2019 in terms of total assets (UAH 7.510 billion), according to the National Bank of Ukraine.
Cypriot Dragon Capital Investments Limited is going to acquire shares of Arricano Real Estate Plc developer’s Cypriot subsidies: Museo Holdings Limited and Sunloop Co limited, which would grant over 50% of the votes in the management body of the companies. According to an agenda of the Antimonopoly Committee of Ukraine (AMCU), the regulator will consider the issue of granting permission for the transaction at a meeting on September 12.
As reported, Arricano Real Estate Plc (Cyprus), managing company and developer of shopping and entertainment malls in Ukraine, is going to sell two its properties: Sun Gallery Mall in Kryvyi Rih (Dnipropetrovsk region) and City Mall in Zaporizhia.
According to the developer, Sun Gallery is currently held in Arricano’s subsidiary, PrJSC Ukrpangroup, a Ukrainian subsidiary of Museo Holdings Limited and City Mall is currently held in in Arricano’s subsidiary, Pryzma Alfa LLC, aUkrainian subsidiary of Sunloop Co Limited.
Arricano is one of the leading real estate developers of shopping centers in Ukraine with European investments. It is listed on the AIM Market of the London Stock Exchange since 2013. Today Arricano Group owns and operates five completed shopping centers and 49,9% shareholding in Sky Mall and land for further three sites currently under development.
Dragon Capital Group plans to finalize deals worth $250 million by the end of 2019, Dragon Capital CEO Tomas Fiala has said.
“We have several deals at the completion stage that we will finish anyway. Before the [presidential] elections we closed deals that we already had on the pipeline for six months or a year. We did not work on the new pipeline because we wanted to see what the outcome of the elections will be. So far, everything that President [Volodymyr] Zelensky and his team are doing does not scare us..,” Fiala told Interfax-Ukraine on the sidelines of the RAU Investment Forum 2019 in Kyiv on Tuesday.
He said that the company has now resumed the process of creating a pipeline and plans to close about 10 deals in real estate and private equity by the end of this year.
“Within 12 months, if there are the correct appointments to the government, if the ministers suit investors, if they are clean reformers who can implement key structural reforms, if the president and the government do everything to restore the rule of law in the country, we will close about 10 transactions, and it can be an amount of about $250 million,” Fiala said.
He said that despite the rising cost of real estate offered on the secondary market, the growth potential for the company remains enormous.
“After the [parliamentary] elections, we and our partners can quietly double our investments in real estate and private equity in two or three years. We have invested $500 million in the last three and a half years and this figure can be doubled in two or three years. With the right policy of the state, we can invest up to $1 billion,” he said.
In particular, according to Fiala, Dragon Capital is interesting, first of all, in warehouse and office real estate. He predicts further growth in rental rates in these segments due to limited new supply.
At the same time, in connection with the planned large volumes of commissioning new retail real estate in Kyiv, Dragon Capital is more interested in retail real estate in the regions.
“In the warehouse real estate segment it will not make sense to build new facilities until the rates increase by 20%,” he said.
According to Fiala, since 2015, Dragon Capital has acquired 22 properties with a total area of 620,000 square meters in different segments.
“Half of this portfolio is warehouses, and more than 150,000 are offices, as well as commercial real estate… This is a big load on our resources… We had to create a real estate management team from scratch – more than 100 employees. The portfolio shows an increase in operating income of 10-15%. This year, growth may be even higher,” he said.
Meyer Bergman international investment fund (London) has finalized a deal to sell the Aladdin shopping and entertainment center with gross building area (GBA) of 16,500 square meters located at 3A, Hryshka Street in Kyiv to UCPIH Ltd, a member of the Dragon Capital group of companies.
“We are very pleased to have completed this acquisition and add Aladdin to our portfolio of shopping centers, which now will consist of Piramida and Aladdin (Kyiv), Sky Park (Vinnytsia) and Victoria Gardens (Lviv) occupying in total over 160,000 square meters,” Managing Director of Private Equity at Dragon Capital Volodymyr Tymochko said.
He said that Dragon Capital is determined to capitalize on it by optimizing the center’s concept and tenant mix. The deal value is not disclosed.
Aladdin Shopping Mall, with a gross leasable area (GLA) of 10,571 square meters, is located in a densely populated residential district right next to Pozniaky metro station and close to Piramida, a shopping center the company acquired in 2016.
As reported, Meyer Bergman acquired Aladdin center in 2008 for $60 million.
Dragon Capital Investments Limited, a member of the Dragon Capital Group, and Dragon Capital New Ukraine Fund L.P. managed by the company led a new investment round and became minority shareholders in Ciklum, a global digital solutions company with major footprint in Ukraine.
According to a press release of Dragon Capital, AVentures Capital participated in the investment round and acquired a minority stake in the company.
The size of minority stakes of all three companies is not disclosed.
“We believe that ongoing global digital transformation will support increasing demand for IT solutions and services, and that Ciklum is very well positioned to capitalize on this sustainable trend. Founded in 2002 and headquartered in London, Ciklum has one of the largest footprints in Ukraine, great expertise and access to IT talent. We are enthusiastic about the opportunity to support one of the leading companies in the segment, which is run by great management and shareholders,” Managing Director, Co-Head of Private Equity at Dragon Capital Andriy Nosok said.
“We are excited to welcome Dragon Capital and Aventures Capital to our shareholder base. This investment will continue to propel Ciklum’s rapid growth in delivering cutting edge technologies to clients around the globe,” Chief Executive Officer of Ciklum Michael Boustridge said.
Dragon Capital group of companies was founded in 2000 and it is one of the largest on the Ukrainian investment market. It works in the field of direct investment and financial services, provides a full range of investment banking and brokerage services for corporate and private clients.
Dragon Capital New Ukraine Fund L.P. was created in November 2015. Dragon Capital manages the funds. Soros Fund Management (SFM) acts as the co-investor in the fund.
Ciklum is a leading global digital services and software engineering company founded in 2002. Ciklum provides services to design and test software, it is involved in innovative research and design, works with Big Data and engineering consulting services.
AVentures Capital was founded in 2012. It invests in IT companies at various stages of their development.