Ukraine shopping mall developer Arricano Real Estate joins AIM

Ukrainian shopping centre developer and operator Arricano Real Estate has joined AIM in a 241m-pound initial public offering (IPO) to increase the pace of expansion in the under-developed market in the country. Joint brokers Smith & Williamson and Whitman Howard drummed up $24m of new cash for the company at $2.33 a share, with the shares opening at $2.50 on Thursday to give Arricano a market capitalisation of $241m.The company, which is incorporated in Cyprus, currently owns and operates five shopping centres in Ukraine, including two in the capital Kyiv.On flotation it used its shares to acquire four development properties, three in Kyiv and one in Odessa, for $66m worth of new shares plus a further deferred $20m on one property.The proceeds will be used to continue the development of Arricano's existing portfolio of operating assets, as well as the development properties being acquired, and to fund future short-term working capital requirements.Chief Executive Officer Emil Budilovsky was confident that the group was well positioned to capitalise on the "under developed" retail real estate market in Ukraine. He maintained that Arricano was one of the few developers in Ukraine capable of completing sizeable retail schemes during the recent financial crisis. "Its management has a combination of local and international expertise and Arricano is one of the few enterprises able to offer a platform to both international and local retailers." He claimed that the group combined stable operating cash flow from existing properties with growth prospects from its proposed development portfolio and its ability to obtain bank financing. Interim profits to June 2013 revealed a reversal of its last few years of revaluation gains from its properties, with $1.7m of revaluations losses leading to a $3.5m net loss. Previous full-year results for 2012 showed flat revenues of $16.4m, $26.9m of revaluation gains leading to net profits more than doubled to $19.8m. Budilovsky said the group intends to remain focused on Ukraine for the foreseeable future. "Over the next three and half years, the group intends to extend its portfolio to approximately nine properties."OH