A major global private equity and real estate investor is investing millions into Karavan Real Estate Ltd
A major global private equity and real estate investor is investing tens of millions of dollars into a leading Ukrainian trade and entertainment complex developer, marking the continued intensive growth of the commercial property market in the capital and large metropolises around the country.
Investment bank Renaissance Capital announced on Dec. 19 that funds managed by Citi Venture Capital International and Citi Property Investors, both business units of Citi Alternative Investments, have signed an agreement to invest up to $140 million into Karavan Real Estate Limited, the holding company for the Karavan Group, a major commercial real estate player that develops its own shopping and entertainment centers in Ukraine. Renaissance Capital managed the deal.
According to the agreement, the investors will infuse $100 million into Karavan pending certain conditions. The investment will be made in stages with the first tranche delivered last month. Renaissance said investors may increase their total stake by $40 million in early 2008.
Karavan CEO Dennis Sluchynskyy said, “We are proud to be the first Ukrainian company to partner with private equity funds managed by Citi. No doubt, it is a positive signal that international investors of such caliber make a significant investment into our company. This transaction will allow Karavan to continue its growth and strengthen its leading position in the Ukrainian market.”
Sergiy Oleksiyenko, the vice president of Renaissance Capital said that “the total investment in Karavan by the Citi funds and other international investors will be bigger than initially planned and is expected to amount to $195 million.”
Svitlana Dryhush, a research analyst with Renaissance Capital said the Ukrainian market for trade and entertainment complexes is not saturated and is primarily concentrated in the country’s large cities.
She said that Karavan’s strategy will focus on Ukraine’s regions, specifically developing complexes in cities with populations of more than 1 million residents such as Dnipropetrovsk, Kharkiv, Odesa and Donetsk.
“Three or four complexes will be built in Kyiv, while others will be developed in other cities with over 1 million residents,” Dryhush said.
According to Renaissance Capital, Karavan plans to open more than 15 retail and entertainment complexes in Ukraine by 2010. Currently, the company operates one complex in Kyiv and another in Kharkiv.
