Andrei Imbroll, founding shareholder and director of VBL plc, discusses the future of the Group and the upcoming listing on the Malta Stock Exchange.
The VBL Group is well known for its close link with the capital. Why Valletta?
Valletta is the administrative, cultural and tourist heart of the island. VBL is a real estate investor with a diverse portfolio, covering residential, hotel, commercial and office spaces, with a clear focus on Valletta. This focus allows us to have a clear vision of where we want to go, but more importantly, it helps us determine where we want Valletta to go.
The offer period for the IPO ends on September 24. You are raising capital through this IPO, which is not very common in Malta. What is the reason for the IPO and why the equity?
Currently, 20 percent of the LAV portfolio is developed and gives the Group excellent returns. We are raising equity capital to accelerate the development of the 80 percent of the portfolio that is still underdeveloped. This development cycle will significantly increase our revenues and allow us to achieve economies of scale and therefore improve our bottom line.
Listing the company on the Malta Stock Exchange was a milestone set by shareholders from the start. VBL has a significant number of shareholders, most of whom are seasoned businessmen, specializing in various segments. They chose to invest their savings in a historic real estate stock game because they believed it was a safe real estate investment with limited supply, while Valletta offered huge upside potential.
While stock quotes are not very common locally, I’m sure others will follow our lead and look for stock quotes on the MSE. VBL started investing heavily in Valletta in 2012, when few private companies were investing in our capital. As we have had an impact on the real estate market in Valletta, we aim to have an impact on the MSE.
Local equity investors traditionally prefer dividends over growth. Your publicly available prospectus forecasts impressive growth. Do you think it will be a challenge?
For the past five years, VBL has been paying an increasing dividend to its shareholders. It also paid a dividend during the COVID-19 disruption, unlike many locally established companies. This is the culture of the company and by accelerating development we will be able to significantly increase our dividends while shareholders continue to enjoy growth.
You raise 20 million euros of equity, part of which will be used for the exit of shareholders. If you believe so much in the future of LAV, why are shareholders selling?
Creating a history of regular liquidity events for shareholders is a must. An IPO is one such opportunity. Shareholders need to be sure that they are investing today and that they will have the option to exit in the future. That said, the first 10 million euros raised is intended for the purchase of newly issued shares and only the excess will be used for the purchase of existing shares. No shareholder withdraws completely, but cash is generated for all shareholders as larger shareholders enter a two-year lock-in period.
What do you mean when you say LAV is “your gateway to Valletta”?
Anyone looking for Valletta accommodation, entertainment, residence, office space and more could simply contact VBL and we would introduce our clients to all that Valletta has to offer. With the IPO, “Your Gateway to Valletta” takes on a new dimension. Investors can now own part of Valletta by owning VBL shares. Shareholders will derive significant benefits from the VBL Shareholder Program, which will seek to engage shareholders in interacting with our products.
Where do you see LAV and Valletta going?
At LAV, we won’t be reinventing the wheel. In the next cycle, we will continue to do exactly what we have been doing over the past decade. Develop Valletta real estate in our portfolio and consolidate the Valletta hotel market. As we grow our developed portfolio, we will further diversify our revenue streams and seek to add value to the Valletta product.
As for Valletta, VBL has already worked on the regeneration of Valletta’s historic nightlife district at The Gut in Strait Street. In the next phase, we are working on a new fashion district in the city and the revitalization of the retail segment, as well as investing in a number of large-scale greening projects, including the Salinos and the 1,000 m² roof of the VBL building.
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