Driving forward: M&A in Ukraine

19 Червня 2019

Ukraine deal value up 91% in 2018 to €1.05 billion

London/Kyiv, 20 June 2019: Ukraine’s M&A market continued to recover strongly in 2018, according to a new report from Aequo and Mergermarket. Compared to 2017, total deal value surged by 91% to €1.05 billion and the total number of transactions rose by more than 31% to 59 deals.

The leap in deal value can be explained by the closing of two deals: industrial and chemicals group ZAO Zavod Forge, acquired by private investor Sergey Tigipko for €263m; and agriculture company Mriya Agro Holding, purchased by Saudi Agricultural and Livestock Investment Company for €209m. These two transactions accounted for nearly half of last year’s total deal value.

Anna Babych, a partner at Aequo, commented: “The closure of the Mriya deal is a promising test case. It was a very distressed asset as a result of alleged fraud on the part of the former owner, but over a year the creditors successfully managed to restructure the debt and sell it for a good price to a new Saudi investor. That was a good sign. It showed that outside investors can have faith in the market here.”

Ukraine’s economy continues to show steady growth and 2019 is expected to represent the country’s next year of economic expansion despite of presidential and parliamentary elections. According to Denis Lysenko, managing partner at Aequo, the later will be especially significant. “The Ukrainian economy is really shaped by government policy as it’s the Cabinet of Ministers which take decisions on major economic issues. So, the parliamentary elections could be decisive in whether or not staying on the current path of pursuing closer ties to the EU, economically and politically, will be continued,” Lysenko said. “So far, our expectation is that the country is already well along that path, and so we do not expect any major geopolitical or economic change as a result of this year’s elections.”

Further key findings from the report include:

  • The financial services sector continued to perform strongly in terms of volume in 2017-18, with 16% of the share; while agriculture led the way in terms of value, accounting for 35% of total deal value.

  • 47% of deals in 2018 were conducted by foreign bidders, up from only 27% in 2017.

  • The Ukrainian economy is expected to grow at a rate of 2.5% in 2019, according to the National Bank of Ukraine. While this was lower than the 3.3% growth rate in 2018, it is expected to increase to 2.9% in 2020 and 3.7% in 2021.

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