Ukrainian Hotel Chain “7 Days” Raises $32.9m after Placing 16% Stake

Kyiv, November 13, 2007 — New Ukrainian hotel chain operator Clubhouse Group Holdings has announced the placement of a 16.4% stake in the company with western investors for $32.9m. Company shareholders plan to use the proceeds from the placement, which puts the market capitalization of the company at $200m, to develop their chain of 3-star hotels under the “7 Days” brand in various regions of the country.

Kyiv-based investment bank Dragon Capital organized the placement and acted as the exclusive financial advisor on the transaction. The newly placed shares, which attracted a range of institutional and private investors from Europe and the United States, will be converted into Global Depository Receipts (GDRs) with listing on the Frankfurt Stock Exchange to give investors added liquidity. A total of 2,452,250 GDRs priced at $13.43 per GDR were issued, implying a ratio of 250 GDRs per one share.

Dragon Capital Managing Director Tomas Fiala (left) and Clubhouse Group Holdings Supervisory Board Chairman Igor Balenko hold a press conference in Kyiv on November 13, 2007, to announce the equity capital raising for Clubhouse Group. Source: Kommersant

Clubhouse Group currently operates one hotel in each of Kyiv and Kamyanets-Podilskiy (Khmelnytskiy region), though plans call for the development of seven more hotels in Kyiv, Lviv region and Crimea by the end of 2009.

The company also hopes to attract $50m of debt financing to expand the chain to 20 hotels covering all major regional centers and popular tourism areas of the country in time for the 2012 European Football Championships.

“Despite the political uncertainty in Ukraine and fallout from the subprime credit crisis in the west, investors showed strong interest towards the Clubhouse Group placement, not in the least part because of the strong growth the Ukrainian hospitality industry is set to enjoy ahead of the Euro 2012,” said Dragon Capital’s Managing Director Tomas Fiala.

Clubhouse Group co-founder and principal owner Igor Balenko believes the demand for quality hotel rooms in Ukraine is high considering that 84% of the country’s existing hotel room stock, or 51,700 rooms, was built during the Soviet period. At the same time, quality stock accounts for only 4% of existing hotel room supply.

In general, Ukraine lags behind the rest of Europe with respect to the availability of quality hotel rooms. Ukraine has just 1.1 hotel rooms per 1,000 persons, or half as many as in Poland (2.2) and far behind Slovakia (5.2), Hungary (6.5) and the world’s most popular tourism destination, France (10.8). And while the average development cost per 3-star hotel room in Europe is $48,000, Clubhouse Group plans to include various spa and entertainment attractions and other modern features in its “7 Days” chain, with room development costs planned at $60,000.

Clubhouse Group Holdings ( is the founder and operator of “7 Days”, Ukraine’s first 3-star hotel chain. The company, which plans to have nine hotels in the chain by end-2009 with a combined total of 1,853 rooms, is currently building hotels in Lviv region (4), Kyiv (2) and Crimea (1). Future plans call for the development of another 11 hotels by 2012, giving the chain a combined total of 20 hotels and 4,000 rooms set in all major regional centers and tourism hotspots of the country.


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