Citi Property Investors, along with Citi Venture Capital International, has agreed to invest up to $140 million (€97 million) into Karavan Real Estate Limited, a Ukrainian shopping and entertainment mall developer.
Karavan is developing its own network of shopping and entertainment centers under the Karavan trade mark, and is one of the largest companies in the commercial real estate sector in Ukraine. The company opened the first shopping and entertainment center in Ukraine in Kyiv, followed by a similar center in Kharkiv, in 2006. The company plans to open more than 15 trade and entertainment centers throughout Ukraine by 2010.
According to the agreement Citi will first invest $100 million into Karavan initially, and if the company meets certain expectations they will receive an additional $40 million later in 2008.
Karavan is the first Ukrainian company to receive investment from Citi’s private equity funds. Sunil Nair, Citi Venture Capital’s managing director for Central/Eastern Europe, the Middle East and Africa, said the funds are planning to look for future opportunities in the country. He added that the current investment will be used to expand the scope of Karavan’s operations.
The exclusive arranger of the offering was the Renaissance Capital investment group, an investment bank with asset and wealth management, merchant banking and consumer finance companies focusing on Russia, Ukraine and Kazakhstan. In November Jeppe de Boer, the founder of Goldman Sachs’ European real estate advisory business, left that firm to join Renaissance as its head of investment banking real estate, saying that, “the center of gravity in European real estate capital markets [is making] a fundamental shift to the east.”
CVCI’s managed private equity funds total over $7 billion in investments and committed capital, while Citi Property Investments has over $12 billion of assets under management.