Dragon Capital Completes $77.8m Private Placement for VK Development

Kyiv, March 21, 2008 — Investment bank Dragon Capital has successfully completed a private placement for Davento PLC (Cyprus), raising $77.8m for a 12.3% stake in the parent company of Ukrainian property developer VK Development.

Dragon Capital acted as sole financial adviser and bookrunner to Davento PLC in the transaction, which implied the sale of GDRs in Davento and values the company at a market capitalization of $627.8m. The money raised will go to finance the construction of nine retail centers under the “Ekvator” brand, two warehousing complexes and to buy land for new retail centers.

The sale of Davento GDRs, which were bought by 11 investment funds and private investors from Europe and the United States, completes an additional issuance of 12,634,000 GDRs made ahead of the placement at a ratio of 500 GDRs per Davento share.

The GDRs were placed at a price of $6.161 and were admitted to trading on the Frankfurt Stock Exchange Mar. 17.

“Investors today are looking primarily at companies with a solid track record and past experience of raising equity capital,” said Dragon Capital Director of Investment Banking Andrei Pivovarsky. “VK Development is a company that meets these criteria and it has proven its worth to investors. At a time when other developers are either postponing their floatations or are seeing their shares lose value, VK Development received a high valuation from investors, achieving a P/NAV of 1.” 

In an earlier transaction, all investors who had bought shares in VK Development at the November 2006 private placement were given the opportunity to take part in a share swap, exchanging earlier purchased shares for Davento GDRs.

The swap provided investors with more liquid securities and a listing on a foreign exchange (Frankfurt) as well as exposure to a more diversified portfolio of development projects under the larger company. Following the latest placement of Davento GDRs, the company’s free float has risen to approximately 24%.


Davento PLC, founded in June 2006, is a Ukrainian real estate development company created as a result of a merger between Davento LLC and VK Development. Davento PLC currently has 11 commercial real estate and warehousing projects in its portfolio totaling 700,000 m2 of GLA. In November 2006, VK Development raised $37m via the sale of a 23% stake in the company to Western investors. To date, or 16 months since the placement, VK Development has successfully developed and leased out more than 100,000 m2 of commercial real estate in Ukraine. 

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