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Ukraine sees rise in M&A over 2017

The quantity of transactions and the total volume of deals is expected to maintain strong growth in 2018.
21:20, 28 March 2018

Open source

After several years of contious fall, in 2017, Ukraine finally saw an increase in mergers and acquisitions, both in terms of deal flow (22%) and the aggregate value of transactions (37%),” KPMG wrote in a new report on M&A activity in the nation, which was published in late March 2018, UNIAN reports.

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“However, deal activity remains well below the recent peak reached in 2013, and at just under 1% of the country’s gross domestic product, mergers and acquisitions in Ukraine is four times lower than the world average and constitues less than a tenth of the deal making exhibited in the United States or the United Kingdom,” the report reads.

“While this is symptomatic of the turbulent economic and political situation the nation has faced over the recent years, which inevitably affected the capacity of investors at home and the appetite of foreign ones, it also reflects the low transparency in the Ukraine’s M&A practice.”

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The report says the value of 2017 M&A in Ukraine was driven mostly by three major deals accounting for over $100 million. In June of the previous year, Kernel, the largest agricultural corporation in the nation, used a fraction of the proceeds from the January Eurobond placement of $126 million to acquire Ukrainian Agrarian Investments from Russia’s Onexim Group for $155 million. A group of international investors acquired a 13% stake in Ferrexpo from CERCL Holdings in January for $126 million. In May 2017, Evraz Group sold its Ukrainian iron ore mine and beneficiation plant (ESB) to DCH Group for $110 million.

Although the value of inbound M&A dropped by slightly over one-third in 2017 to $351 million, the quantity of transactions has remained largely stable over the past three years.

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“This reflects investors’ continued confidence in the medium-to-long term prospects of the nation, and, although progress has been sluggish at times, the government’s efforts to implement reforms to transform the country’s economy. Similarly, foreign direct investment (FDI) has recovered sharply from the fall of 2014, with a number of investment funds returning to Ukraine,” it said.

KPMG forecasts that in 2018, the number of transactions and the aggregate value of deals will continue growing and show a strong rise compared against 2017.

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