Dnipro Hotel sold at state auction day after gambling relegalized

The Dnipro Hotel, among Kyiv’s most recognized hotels
that is located in the city center, was sold at a July 15 state auction for UAH
1.1 bln (USD 40.7 mln). The buyer was Smartland LLC, a firm that is directed by
Maksym Tereshchuk (17.71% stake) and founded by Finnish poker champion Petteri
Vanhapelto, as reported by the epravda.com.ua news site. The 82.28% stakeholder
in Smartland is ICE TOWN LLC, which was founded by Oleksiy Ihunin and directed
by Anastasiya Butenko. The hotel’s starting price was set at UAH 80.9 mln by
the State Property Fund in an auction that drew the participation of 29 firms.

The Dnipro Hotel auction occurred the day after
Ukraine’s parliament approved legislation to relegalize gambling. The measure
drew 248 votes, including the support of 224 MPs of The People’s Servant
faction and independent MPs (business-oriented Trust and For the Future
groups). The other four factions offered no votes. The legislation allows for
the opening of casinos, online casinos, street and online betting parlors, slot
machine halls and Internet poker websites. Though the state is estimated to
gain UAH 4 bln in annual tax revenue from the legalization of casinos and slot
machine halls, the state expenditures to address addiction will be ten times
higher, said MP Vadim Novinsky of the pro-Putin Opposition Platform For Life
party.

Vanhapelto is tied to Estonia-based Olympic
Entertainment Group AS, which filed a lawsuit against the Ukrainian government
in the London Arbitration Court for closing its casinos after parliament
approved legislation in 2009 to make gambling illegal. The company said it had
23 gambling venues in Ukraine at the time and suffered EUR 40 mln in damages as
a result. The company is arguing that Ukraine violated its international
agreement with the Estonian government on protecting investments, and is
seeking compensatory damages.

Zenon Zawada: It’s no
coincidence that one of Kyiv’s leading hotels was sold the day after parliament
voted to legalize gambling. Among those interested in the vote was the cabinet,
which is desperate for tax revenue. This legislation (certain to be signed by
the president) raised the value of all of Ukraine’s hotels, which have suddenly
become among the nation’s most lucrative investments, especially if the
coronavirus situation is resolved by the year end.

Should Concorde Capital be able to address current
hurdles, it can expect to draw more interest from investors for the President
Hotel in Kyiv, for which it is currently under agreement to sell as the
state-selected investment adviser.