Companies from the Asian region are interested in infrastructure projects in Ukraine, - Olga Magaletska

On June 10, 2020, Olga Magaletska, the Head of the Office of the National Investment Council took part in the online conference "M&A in Ukraine: Riding Currents", organized by the AEQUO law firm.

The discussion was attended by Anna Babych, Partner, AEQUO; Philipp Grushko, Partner, SD Capital; Brian Best, Managing Director, Investment Banking, Dragon Capital; Olena Bilan, Chief Economist, Dragon Capital; Valeri Kulitski, Managing Partner, Baltic Partners, Latvia; Igor Bilous, Managing Partner, Altius

The participants of the conference discussed the landmark M&A deals, leading industries and key business activity indicators in 2019, the global economic crisis 2020 and future forecasts, as well as the potential future M&A deals and Ukraine's investment attractiveness on the global market.

During the event Anna Babych presented the results of the complex 5-year research of the Ukrainian M&A market. The research was carried out by Aequo jointly with Mergermarket (UK), an independent M&A intelligence service.

Olga Magaletska thanked the organizers of the event for the invitation and noted that last year and at the beginning of this, the interest from investors to Ukraine was very high, but due to the global economic crisis and pandemics, activity from foreign investors have decreased.

“Such tendency is characteristic not only in relation to Ukraine; it is a global world trend. Nevertheless, we still in the focus of foreign investors. For example, among members of the National Investment Council, companies from the Asian region show great interest to the infrastructure projects in Ukraine. They are interested in these projects and most likely they will confirm their interest by real actions.  These are primarily concession projects, small-scale privatization projects and public-private partnership projects. In addition to infrastructure, potential investors are also interested in PSA auctions and the processing industry,” said Olga Magaletska.

The Head of the Office noted that currently the key incentives for the attraction of new investments are the land market reform and the bill "On state support of investment projects with significant investments", so-called "investment nannies", which will be submitted in the nearest future to the Parliament for consideration.

Regarding the opening of the land market, Olga Magaletska noted that the adoption of this law was the right step and it will have a positive impact on the investment climate of Ukraine in the medium and long term. However, in the short term, the adoption of land reform will not significantly affect large foreign investors.

Regarding the draft law “On State Support of Investment Projects with Significant Investments” , Olga Magaletska said that the bill provides a number of incentives and supporting tools for projects from 30 million euros: “In particular, it is planned to provide tax benefits (exemption from income tax and exemption from duties on the import of new equipment), the provision for use of land necessary for the implementation of the investment project, as well as the construction and reconstruction of related infrastructure at the expense of the state. The total amount of support from the state will be up to 30% of the amount of investment. Prerequisites for investors will be the implementation of a project worth min 30 million euros during 5 years, the creation of at least 150 new jobs with wages 15% higher than the average in the industry in the region, as well as that the investor should be not a sanctioned legal entity, bankrupt or a resident of the aggressor country. "

Olga Magaletska also noted that large foreign investments are expected next year: “At the moment, we have started a dialogue with the EBRD team regarding the attraction of FDI to Ukraine and access to other countries, business associations and foreign companies. Given the global crisis, we understand that large investors will not make decisions quickly. At best, it will be at the beginning of 2021. As for the M&A market, most likely, their number will not increase this year, or they will be local and with the help of those investors who are already represented in Ukraine. In any case, Ukraine is interested in new projects - be it new investments and greenfield projects, or M&A deals. And the Office of the National Investment Council will contribute in every way to this,” summed up Olga Magaletska.

© 2020 Office of the National Investment Council of Ukraine