DUPD – exiting at just over 15p – c+14%

Just exited my Dragon Ukrainian Property position at a touch over 15p.  This is a pretty disappointing result.  It is far less than the company’s NAV which is more than double this amount.

The tender offer has been accepted by over 50% (59.61%) of the shareholders at 15p.  This means it will happen.  The remaining shareholders have until August the first to tender (brokers may have earlier deadlines)   If more than 75% accept it’s likely the company will be delisted, if 90% accept the minority gets squeezed out.

Looking at who owns what, 90% will not be achieved and 75% seems very unlikely, but not impossible.

I think they were able to achieve this in part due to their RNS saying they would put another $5m into the oblon residences – drawing out capital returns.  This could, of course, be a bluff on the part of management.

One of my few investing rules is I don’t go into companies with dominant shareholders (45%+).  As a little guy I simply do not trust I will be treated fairly so I stay away.  This has both saved and cost me quite a bit over the years…  As with all rules, I will bend on occasion, but not this time.

I could be missing out – one likely option is another offer at a fairer price in 12-24 months time.  Another option is a change in investing mandate/fall in the share price, though I think this is less likely.  I suspect the remainder will be tightly held so there will be few interested sellers. Ukraine is a volatile environment to hold and I wouldn’t want to hold long term at this price, even though most of the property is in the safer east.   I’m also increasingly nervous about delisting.

Not overly happy at this – I dont enjoy selling things for less than they are worth but in this case I think its the best way to proceed.  Best way to do it is look for a bid north of 15p, or if you have to tender.

Made about 14% on my post in May.


I am up 33% against the post in February 2016.  This isnt as good as it sounds as I had to wait much longer after the capital return…


I am struggling a bit for new ideas with markets looking pretty fairly valued.  Ideas are, as ever, appreciated.


5 thoughts on “DUPD – exiting at just over 15p – c+14%”

  1. Still an excellent return all things considered. I held this one on and off but was never confident enough to take a significant position.

    I agree the market does look toppy with not much standing out as being obviously cheap. I’m currently about 75% in cash. I’ve started buying back into Bowleven (BLVN) at 25p and Enteq (NTQ) at 21p. Both valued at less than net working capital I’ve also a reasonable holding in regeneration company UAI because of its yield and discount to NAV.

    1. Thanks Doug, UAI sounds interesting – will need to understand portfolio much better. I’m bearish on UK property but discount is very healthy and PPP perhaps lowish risk.

    1. Thanks Sajid, I did invest in DCI, I then changed my mind as there was evidence the assets were in the books too high and would take a while to sell… I posted on it a while back….

  2. So the latest turn of independent directors in favour of the offer is interesting. Classic take dark scenario is now a risk.

    More interesting is that Lars Ernest Bader is building up a stake still, presumable to get to 25% to block any delisting?

    Interesting one to watch – what are your thoughts here?

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