PARSIPPANY, N.J. – Ukrainian investment company Concorde Capital announced on March 14 an internal IPO for the Ukrainian soccer club NK (Narodniy Klub) Veres Rivne, based in Rivne. This is the first time in 15 years that such a move has occurred in Ukraine and the first time that a professional Ukrainian team is to be publicly listed.
The launch of the IPO took place on March 16 at Aloft Kyiv hotel with Veres President Ivan Nadein. Also present were Ruslan Magomedov, chairman of the National Securities and Stock Market Commission, Maksym Lyabanov, member of the Commission, and Concorde Capital CEO Igor Mazepa.
Mr. Nadein, who owns 70 percent of Veres, stated that the club plans to raise 50 million hryvnia (1.5 million euros) by March 2022, and that funds would be used to grow the club, focusing on youth development and training infrastructure. He said he plans to buy 60 percent of the 500,000 publicly listed shares to continue as majority shareholder.
However, “all shareholders will be able to see what the club’s budget is, and what the money is spent on,” he said. “An element of transparency and accountability will appear.” Mr. Nadein also said that businessmen from Rivne have pledged to invest 1 million hryvnia (30,000 euros) in NK Veres.
Other European publicly traded clubs include Arsenal, Barcelona, AS Roma and Juventus, which are all listed on the stock market. In Germany, however, only non-profit fan associations are allowed to own majority shares in a soccer club.
Mr. Magomedov said Veres can “set an example for others willing to start trading on Ukraine’s stock exchanges” and “illustrate that Ukraine can handle a complicated procedure like an IPO.”
Mr. Mazepa said he believes the club’s move signifies a growing trend in Ukraine. “There is now a huge group of investors in the country. Our fellow citizens are bringing money into the stock market.”
Other companies that are expected to follow the example set by Veres include telecom provider Kyivstar, postal service Novaposhta and medical clinic chain Dobrobut.
This is the first public joint-stock company in the Ukrainian soccer sector, which hopes to attract investment in sports and to break the grip that oligarchs have traditionally had in the ownership of Ukrainian soccer clubs.
Often times, club owners would neglect youth team development in favor of foreign imports, to the detriment of Ukraine’s national teams. These arrangements have put the clubs at the mercy of their financiers, as was seen with Dnipro Dnipropetrovsk, which was owned by oligarch Igor Kolomoisky and saw the team rise to the finals of the UEFA Europa League in 2015, only to have Mr. Kolomoisky cut funding in 2016. By 2018, the team was relegated to the lowest tier of Ukrainian soccer leagues.
Similarly, teams such as Metalurh Zaporizhia, Metalist Kharkiv and Arsenal Kyiv have gone by the wayside after respective owners withdrew funding in the face of the economic downturn caused by the war in the Donbas.
NK Veres plays in the second tier of the Ukrainian soccer league, and shares were made available on April 12 on the Ukrainian Stock Exchange, with half a million shares available initially, at 100 hryvnia per share. It is hoped that the Veres experiment will provide the club with a more stable source of funds and partly insulate it from the whims of individual owners or majority shareholders.
With a focus on youth development, self-sustaining business models can give the club the means to raise even larger sums of money in the future from player sales. It is also hoped that the opportunity to purchase shares in a local club can bring the club closer to the community that the club represents.
Founded in 1957, Veres is in third place of the Ukrainian First League; it held sixth place in the Ukrainian Premier League in the 2017-2018 season after which it was merged with FC Lviv; later it was renewed as Veres under the leadership of Mr. Nadein.