EBRD re­mains a be­liever in Ukrainian in­vest­ment

Kyiv Post - - Business - BY MARIANA ANTONOVYCH [email protected] The Kyiv Post’s le­gal af­fairs re­porter Mariana Antonovych can be reached at [email protected] Editor Mark Rachkevych con­trib­uted to this re­port.

De­spite war and re­ces­sion, the Euro­pean Bank of Re­con­struc­tion and De­vel­op­ment sees value in Ukrainian as­sets and con­tin­ues to in­vest. The EBRD, a multi­na­tional in­vest­ment agency, is Ukraine’s sin­gle largest in­vestor with a port­fo­lio of €5.1 bil­lion and in­volve­ment in 344 projects, rang­ing from agri­cul­ture to energy and high tech­nol­ogy.

The bank has pumped in an av­er­age of €988 mil­lion in in­vest­ments over the last six years.

A ma­jor sec­tor is agri­cul­ture, well on tar­get to reach last year’s fig­ure of €250 mil­lion, EBRD di­rec­tor in Ukraine Sevki Acuner said. Agri­cul­ture ac­counted for 20 per­cent of EBRD’s 2014 port­fo­lio last year.

Nibu­lon, a pro­ducer and trader of grain and oilseeds, be­came the latest bor­rower last month when the Lon­don-based len­der ar­ranged a $130 mil­lion syn­di­cated loan for the Ukrainian grower, con­tribut­ing $45 mil­lion from its own ac­count.

“I ex­pect a very strong per­for­mance this year,” Acuner said.

EBRD is also look­ing to close a deal with two in­for­ma­tion tech­nol­ogy firms. Euro­pean Bank and Re­con­struc­tion De­vel­op­ment di­rec­tor in Ukraine Sevki Acuner. (UNIAN) Acuner said one deal may in­volve eq­uity and that the com­pany “sells a very com­pet­i­tive ser­vice over the In­ter­net… to in­dus­trial users” glob­ally. He noted that it would be the “big­gest IT deal in the history of EBRD in Ukraine… we want to cap­i­tal­ize and demon­strate to in­vestors that we sup­port such in­vest­ments.”

Ukraine’s state-owned Naftogaz will get a $300 mil­lion loan soon, ac­cord­ing to Acuner, to pur­chase nat­u­ral gas on the Euro­pean mar­ket as win­ter nears.

Four to five mu­nic­i­pal in­fra­struc­ture projects should also con­clude this year. “We’re do­ing roads and trams in Lviv, trol­ley­buses in Odesa,” and a heat­ing pro­ject in Ch­er­nivtsi, the Turk­ish bank- er added.

When Ukraine de­cides to auc­tion the 300 state-owned en­ter­prises for sale, EBRD will be in­volved. “We’re look­ing at post- or ac­qui­si­tion pri­va­ti­za­tion-re­lated fi­nanc­ing…we could look at a few of these as­sets to­gether with a strate­gic in­vestor to sup­port it,” Acuner said.

Ukraine had planned to fill state cof­fers with Hr 17 bil­lion in pro­ceeds from pri­va­ti­za­tion this year. That tar­get has since been re­duced to Hr 1 bil­lion, ac­cord­ing to State Prop­erty Fund man­ager Ihor Bilous.

Ukraine post­poned pri­va­ti­za­tion to let par­lia­ment in Septem­ber can­cel the re­quire­ment to sell 5-10 per­cent stakes be­fore the state can of­fer a con­trol­ling stake in an as­set. The change is nece­sary to pre­vent mi­nor­ity stake­hold­ers from “thwart­ing other po­ten­tial bid­ders” and cap­tur­ing the as­set at a much lower price, Acuner said. “From that per­spec­tive alone the new ap­proach is much bet­ter.”

Some prized as­sets Ukraine is look­ing to sell next year in­cludes the Odesa Port­side Plant, a huge fer­til­izer pro­ducer that ex­ports up to 90 per­cent of its out­put. Another one is Cen­tren­ergo, the na­tion’s sec­ond largest ther­mal energy com­pany.

“Pri­va­ti­za­tion has the po­ten­tial that it would rep­re­sent the spark that is needed for eco­nomic re­cov­ery,” Acuner added.

Re­newed lend­ing to pro­duc­ers of goods and ser­vices would help, he said. But that will only come once banks strengthen – cur­rently the min­i­mum cap­i­tal ad­e­quacy ra­tio is set at 10 per­cent, with fur­ther eq­uity in­jec­tions needed. That will come only once Ukraini­ans “clean out” the bank­ing sec­tor and weed out the legacy of third-party lend­ing at so-called “pocket banks,” the banker said.

Although the cen­tral bank has liq­ui­dated 44 banks since 2014, Ukraine still has too many banks. “You can­not have hun­dreds of banks,” Acuner said. “You gotta have a much more con­sol­i­dated…bank­ing sys­tem.”

En­trepreneur­s are still wait­ing for macroe­co­nomic con­di­tions to im­prove, the rule of law to pre­vail and the cost of fi­nanc­ing to be rea­son­able, he said. “It’s dif­fi­cult to imag­ine the cost of bor­row­ing at 25-30 per­cent; it is an ir­ra­tional pro­posal to bor­row money un­less you’re des­per­ate to run your busi­ness,” Acuner said.

He sees pos­i­tive trends that could even­tu­ally re­store trust in the hryv­nia – which de­clined by more than 60 per­cent ver­sus the dol­lar since the start of 2014 – af­ter Ukraine se­cured a 20 per­cent write-down on $18 bil­lion of its bonds in late Au­gust.

If Rus­sia’s war in the east is con­tained and the “present trend of macro-re­forms and pri­va­ti­za­tion that we talked about can be prop­erly ex­e­cuted…then it is by def­i­ni­tion that peo­ple will start in­vest­ing,” the banker said.

Cor­rupt prac­tices “must not be tol­er­ated,” he added. Acuner said the gov­ern­ment is try­ing to com­bat graft struc­turally and align­ing the coun­try with Western, com­pet­i­tive demo­cratic val­ues.

“When you’ve taken over a com­plete wreck and mess lit­er­ally ... peo­ple should give a lit­tle ben­e­fit of time to get this co­her­ence in place,” Acuner said.

A NIbu­lon trans­ship­ment grain and oil seed ter­mi­nal in Myko­layiv. The agribusi­ness, with more than 82,000 hectares of farm­land, sells grain and oil seeds di­rectly to buy­ers in 64 coun­tries. The Euro­pean Bank of Re­con­struc­tion and De­vel­op­ment se­cured a...

Newspapers in English

Newspapers from Ukraine

© PressReader. All rights reserved.