We decided that situation had improved to the point when we could become moderately optimistic, told Tomas Fiala, the CEO of Dragon Capital at the IV Retail and Development Business Summit in Kyiv. As a matter of fact, Dragon Capital acquired three targets this year — East and West Gate Logistic, and trading center Piramida.
It is possible that together with our partners we will almost double the investments including the current deals in process, told Tomas Filia. The CEO clarified that the company is targeting at controlling stakes of companies that have revenues from abroad. Dragon Capital is also interesting in retail and other commercial property, told Volodymyr Timochnko managing director of direct investments department. At this, e-commerce of specialized offline retail is also in focus. Mr Timochko says that investments in Ukraine may become a unique opportunity, as assets of the companies are not expensive, while development and expansion plans do not require a lot of investments. Dragon Capital representatives advised Ukrainian businesses to properly organize their business structures in order to be ready for some investment agreements. The companies will have to bear close scrutiny, when many foreign investors come and current macro challenges recede into the background. No foreign investors will come without due diligence of accounting and legal framework of the company operations. Thus, companies that avoid taxes through structuring operations via sole proprietors schemes will be not of much interest for foreign investors.
The head of direct investments department has also elaborated on criteria for Ukrainian companies which Dragon Capital takes into consideration when purchasing a company.
'We consider not only the potential but also examine the current situation of the companies where we invest. For example, considering the commercial real estate, we almost do not look at objects that do not meet present-day requirements or or have low occupacy rates, meaning they do not generate cash flows. Considering retail, we do not look at those companies that do not keep up with the trends of time and are non-competitive, losing their market share. Therefore, we are not an investor who may come in and build a business from scratch or radically change commercial approaches', told Volodymyr Tymochko.
The owners of companies have to be capable of channeling main part of the investments into the business development, increase its market share, and be transparent in financial reporting. Such attitudes help to properly assess the operating business. Even if the company does not perfectly meet the requirements, such approaches will definitely contribute to a positive decision leading to engaging with the company on a part of Dragon Capital.
To remind, Dragon Capital Investments Limited, a member of the Dragon Capital group of companies acquired East Gate Logistic, a class A complex located in Boryspil, from Akron Investment Central Eastern Europe II B.V., and 60% of West Gate Logistic, a class A facility located in Stoyanka, from GLD Holding GmbH. The investing Dragon Capital also completed the acquisition of Kyiv-based shopping center Pyramida by purchasing it from a group of American and British investors 100% of shares in 1849-Apollo Overseas I Limited (Cyprus).
Dragon Capital is one of Ukraine’s leading groups of companies working in the field of investment and financial services, offering a comprehensive range of services in equities and fixed income sales, trading and research, investment banking, private equity and asset management to institutional, corporate and private clients. Established in 2000, the company has been minority-owned by Goldman Sachs, one of the largest global banks.