Change in consumer prices in April 2023
Source: Open4Business.com.ua and experts.news
Konkur Investments Limited, a subsidiary of SigmaBleyzer, has entered into a conditional agreement to sell its 56.90% stake in Ukrainian agroholding AgroGeneration to Ukrainian group of companies Novaagro.
AgroGeneration said in a statement that it is about the sale of 126.1 million shares at a price of $0.036 per share and repayment of Konkur’s debt on current operations in the amount of approximately $3.191 million.
It is noted that the completion of the transaction is subject to the approval of the transaction by the Antimonopoly Committee of Ukraine and the buyer obtaining adequate sources of financing for the acquisition.
“Given the significant instability in Ukraine, including the ongoing war, a date for completion of the transaction cannot be determined at this stage,” the statement said.
Under current French law, completion of the transaction should result in a change in the composition of AgroGeneration’s Board of Directors and trigger a mandatory public offer by Novaagro to acquire all AgroGeneration shares not already owned by it.
The price per share in the said public offer will be determined on the basis of the price per share paid for the transaction with Konkur (and taking into account the repayment of debt) and confirmed by an independent expert’s valuation report.
It is also mentioned that on July 26 a request for suspension of the listing of AgroGeneration, whose shares were listed on Euronext Paris under the ticker ALAGR, was filed. Their exchange rate on July 26 was EUR0.05 per share, whereas before the full-scale invasion the shares were quoted at up to EUR0.3, and more than a decade ago at up to EUR2.5 apiece.
It is noted that investment firm SigmaBleyzer has helped manage AgroGeneration for the past 10 years.
As reported, AgroGeneration group of companies in 2022 reduced its land bank to 30 thousand hectares from 56 thousand hectares due to Russia’s full-scale invasion of Ukraine, and received about $19 million in losses due to crop losses, damage to machinery and infrastructure, reserves, resources and other assets.
AgroGeneration was founded in 2007. The company’s land bank before the Russian military invasion amounted to 58 thousand hectares in Kharkiv region, and at the end of last year it was reduced to 30 thousand hectares due to the Russian invasion. The holding company includes seven companies after the operational restructuring carried out in the third quarter of last year in connection with the war. The point of the restructuring was to dispose of “toxic” assets with 25 thousand hectares destroyed or severely damaged due to the war, located near the Russian border, the retention of which would require more than $50 million.
AgroGeneration’s 2022 revenue fell 41.1% from pre-war 2021 to EUR25.854m and its net loss was EUR31.595m compared to a net profit of EUR14.202m a year earlier.
According to the annual report, the agroholding’s gross loss last year amounted to EUR5.608m against a gross profit of EUR32.361m in 2021, while war losses were estimated at EUR15.448m.
The company’s total debt at the end of last year was estimated at EUR18.065m, down from EUR24.599m a year earlier, while assets were valued at EUR36.391m, down from EUR82.033m a year earlier.
According to a presentation from March this year, the agroholding employs about 400 permanent staff. Last year’s harvest amounted to about 80 thousand tons of grain and oilseeds, the machinery fleet includes 33 combines and 92 tractors, storage capacity – 95 thousand tons, including two elevators.
According to the data on the website of the group of companies, 56.9% of its shares belong to Konkur Investment Ltd holding, which is part of the international investment company SigmaBleyzer, 3.3% – to Green Alliance/Gravitation holding controlled by Charles Begbeder (France), 39.8% of its shares are in free circulation.
SigmaBleyzer is based in Houston (Texas, USA) and has been operating private investments in Ukraine for over 25 years.
Novaagro Group has been operating in agribusiness on the Ukrainian and international markets since 2009. It consists of four operating companies specializing in trading, export of grain and oilseeds; cultivation; warehousing; production and sale of mixed fodder, wheat flour and granulated bran, chicken meat.
“Novaagro owns five elevators with a total capacity of 326,600 tons of one-time storage. The group has a feed mill in Chkalovskoye settlement (Kharkiv region), which produces 200-300 tons/day of products. It also has an oil extraction plant with a capacity of 180,000 tons/year.
The group includes the Nova poultry complex (Kharkiv region), which has three production sites with a capacity of 845,000 birds. The slaughterhouse has a capacity of 3,000 heads per hour.
According to the Unified State Register, the ultimate beneficiary of Novaagro Limited is Sergiy Polumisny.
Budgets on the results of more than 5 thousand successful auctions for the sale and lease of land in the system Prozorro.Sales received 1.43 billion UAH, the press service of the JSC “Prozorro.Sales” reported on Facebook on Wednesday.
“Land auctions held in the system Prozorro.Sales, replenished the budgets of different levels for 1.43 billion UAH”, – stated in the release.
It is indicated that 7,971 participants were able to compete in these auctions.
Currently, 778 more auctions are at the stage of concluding transactions. On average, three participants compete for one land lot.
According to “Prozorro.Sales”, the average price growth for completed land auctions is 78.8%.
The leaders in the number of announced land auctions are Kyiv, Odesa, Cherkasy, Lviv and Zakarpattya regions.
As of July 26, 2023 in the system Prozorro.Sales announced more than 1.4 thousand land auctions, which are at the stage of accepting applications for participation.
As reported, from January 1, 2024 in Ukraine will start the second stage of opening the land market, when land will be able to buy legal entities registered in Ukraine. No more than 10,000 hectares of agricultural land will be available for purchase.
The European Bank for Reconstruction and Development (EBRD), with partial support from the European Union, is providing Ukraine’s Kredobank with a EUR25m guarantee to cover the risks of new lending, as well as a EUR25m Trade Facilitation Program (TFP) loan for trade finance to Ukrainian clients.
“The new risk-sharing agreement will allow Credobank to reduce the funding gap, and continued access to financing will help companies to remove bottlenecks in trade in food and agricultural products,” – quoted in the message on Wednesday the words of the EBRD Managing Director in the sector of financial institutions Francis Malizh.
It is noted that the new financing will be available to companies operating in such critical sectors as primary agriculture and agricultural services, food processing, transportation and logistics, retail and pharmaceuticals.
Under the risk-sharing agreement, which the two institutions with prior cooperation experience signed on Wednesday in London, the EBRD is providing a EUR25m unfunded risk-sharing instrument that covers 50% of the credit risk on Kredobank’s new financing totaling EUR100m, but not more than 50% of the portfolio. The EBRD guarantee is provided in two equal tranches.
In addition, EUR15m of the total EUR100m portfolio covered by the guarantee will be available to finance long-term investments by micro, small and medium-sized enterprises (MSMEs) in technologies and equipment meeting EU standards, including investments in sustainable and green technologies under the EU Eastern Partnership SME Competitiveness Program (EaP SMEC), the EBRD said.
He added that participation in the EaP SMEC program will also allow Kredobank and its clients to receive expert assistance in the form of training and advisory support. Eligible borrowers will also receive grant support in the form of investment incentives upon completion of their investment projects.
The EBRD guarantee is backed by a 50% first-loss coverage guarantee financed by donors as part of the sustainability package. The conclusion of this new agreement increases to EUR468 million the total amount of funding supported by such guarantees since the beginning of the war.
As for the EUR25mn under the Trade Facilitation Program, the lender notes that participation in this program will allow Kredobank to increase its support to Ukrainian exporters and importers.
Kredobank is one of the leading banks in western Ukraine and as of the beginning of June it ranks 14th (UAH 46.85 bln) out of 65 operating banks in Ukraine in terms of assets. Kredobank is fully owned by PKO Bank Polski SA, the largest systemically important bank in Poland, whose shares are listed on the Warsaw Stock Exchange.
The National Bank of Ukraine (NBU) will reduce the discount rate from 25% to 23-24% for the first time since June 1, 2022 at a meeting on July 27, bankers interviewed by Interfax-Ukraine predict.
“I am sure that the NBU will decide to lower the rate by 1-2%, because there are all prerequisites for this. First of all, significantly more lively rates of inflation reduction. (…) True, I do not think that the regulator will resort to drastic changes. Nevertheless, the risks and uncertainty remain very significant, and the system has a considerable liquidity overhang, which the NBU is trying to tie up in term deposits. And from the point of view of exchange rate stability, the National Bank should maintain a high level of attractiveness of hryvnia deposits for the population,” – said the board of Unex Bank Ivan Svitek.
He noted that the NBU back in April expected to slow inflation to 14.8% at the end of 2023, but already at the end of June inflation fell to 12.8%.
“So, military risks do not allow to be too optimistic in forecasts, including with regard to inflation. However, the NBU itself openly speaks about the preservation of the potential for its further slowdown,” the banker added.
Elena Dmitrieva, the first deputy head of the board of Globus Bank, shares a similar opinion.
“Now, more than ever, the issue of discount rate reduction is the most probable. At the same time, the “step” of reduction is unlikely to exceed 1-2 p.p., which will actually coincide with the previously announced plans of the NBU,” – said the expert.
According to her, such a decision became possible after a long and painstaking work of the regulator to establish a balance between supply and demand for currency, gradual popularization of the hryvnia as the most reliable currency for preserving and increasing the wealth of citizens.
In addition, thanks to strong macro-financial assistance from partner countries, Ukraine is able to cover a significant amount of state budget expenditures, which has a positive impact on the strength of the hryvnia, including since the beginning of the year the treasury has already received almost $23 billion, Dmitrieva added.
Low inflation, which according to the current macro forecast will not exceed 12.8% by the end of 2023, gradual development of the country’s economy, as well as the NBU strategy of gradual liberalization of the foreign exchange market, which is possible only in conditions of a strong national currency, she said.
According to the first deputy head of the board of Globus Bank, in the perspective of September – December the size of the discount rate may decrease to 20%, it is this that will encourage commercial banks to significantly change the terms of their own mortgage and deposit programs.
“In such conditions, for example, the rates on hryvnia deposits with placement up to 1 year may fall to 4%, and the mortgage ones, depending on the maturity, by 3.5-5%,” she expects.
In turn, the head of the analytical department of Sense Bank Alexey Blinov expects a decrease in the discount rate by 3 p.p. to 22% per annum.
“The improvement in short-term inflation expectations further increases the need for lowering the discount rate. As a first step on July 27, its reduction by 3 p.p. to 22% per annum seems optimal. Given the twofold disagreement between inflation and the discount rate, this would be a rather cautious step,” he pointed out
According to him, Sense Bank, maintains the forecast of the discount rate of 20% per annum at the end of 2023, which is in line with the NBU’s stated intentions to keep the discount rate at a markedly positive real level, even taking into account the risks of accelerating inflation in 2024.
Volodymyr Mudryy, Head of the Board of OTP Bank, Head of the Council of the Independent Association of Banks of Ukraine, also expects that the NBU may decide to lower the rate by 2-3% per annum.
“There are two prerequisites for this. First, it is necessary to stimulate lending to the economy. Despite the fact that business expectations have recently improved, we do not see demand for borrowed funds from business. The corporate loan portfolio, unlike the consumer loan portfolio, continues to shrink. And the price of resources has a big impact on this.
Second, deposit rates are already significantly higher than the inflation rate,” he said.
He noted that inflation was 12.8% in July, while the Ukrainian index of retail deposit rates was 14-15% per annum in hryvnia, depending on the term of deposits, and the NBU has always emphasized that deposit rates should be kept at a level that only compensates for inflation.
In addition, he believes that the NBU’s three-month deposit certificates at a fixed rate at the level of the discount rate will remain in effect for the time being.
Oleksiy Rudnev, Chairman of the Board of Accordbank, notes that in the current environment it is advisable to reduce the discount rate, in particular, to develop lending.
“Consumer inflation slowed to 12.8% year-on-year in June (from 15.3% in July), with the prospect of further decline during the summer months. The NBU’s foreign exchange reserves have reached a historic level of $39 billion, and the dollar has been relatively stable in recent months. (…) In our opinion, the regulator will cut rates, albeit slightly (perhaps by 1.5-3%), as it is important to set the market trend while maintaining the attractiveness of hryvnia deposits,” he said.
For his part, Pivdenny Bank’s strategic development analyst Konstantin Khvedchuk is more modest and expects the NBU discount rate to drop to 24% and the overnight deposit certificate rate to 19%.
“Inflationary pressures have significantly decreased over the past 5 months, and the NBU’s interest rates are now significantly higher than inflationary expectations, so there are grounds to start a cycle of rate cuts. However, given the high uncertainty during the war and the reaction of banks in the face of ultra-high liquidity, the NBU will act cautiously, cutting rates in small steps. By the end of the year, we expect the key policy rate to be close to 20%,” the analyst said.
Sergiy Kolodiy, Chief Macroeconomic Analysis Officer at Raiffeisen Bank, shares his forecast.
“We expect the NBU to start a cycle of monetary policy easing at its next meeting on July 27 after more than a year of unchanged key policy rate at 25%. In our opinion, the first step at the beginning of the rate cut cycle will be cautious (a 100 pp cut to 24%), as the regulator would like to see the market reaction to its decision and calibrate further steps,” the banker said.
Raiffeisen Bank also expects a similar downward correction of rates on standing facilities: certificates of deposit and overnight refinancing loans.
Kolodiy notes that the NBU is likely to maintain the asymmetry in the range of rates on them at the discount rate: “minus” 500 pp for overnight DS and “plus” 200 bp for overnight loans.
“However, the analysis of statistical data shows that since November 2022, overnight loans have not been used as simple access operations,” he added.
“By introducing three-month certificates of deposit at the discount rate and simultaneously reducing the rate on overnight certificates of deposit to the level of “discount rate minus 500 pp”, the NBU managed to change the structure of deposits in favor of longer-term deposits. Banks also gradually raised deposit rates, and now, taking into account the current inflation rate for June (12.8%), real deposit rates (i.e., adjusted for inflation) have returned to positive territory for the first time since the beginning of the war,” Kolodiy said.
Thus, Raiffeisen Bank believes that the NBU has already achieved its goals of increasing the interest of the population in hryvnia instruments, the main of which are deposits.
“Since the situation is developing according to a more positive scenario and we are seeing a permanent slowdown in inflation, in July – 12.8%, while the forecast at the beginning of the year was above 18.7% (the forecast was revised in April to 14.8% at the end of the year), a reduction in the discount rate is quite likely in the near future,” expects Oksana Shveda, Deputy Chairman of the Board of Credit Dnipro Bank.
In the first half of 2023, the Dobrobut medical network paid almost UAH 160 million in taxes to the state budget.
According to its press release, in June of this year, 32 thousand adults received consultations at Dobrobut clinics, which is 30% more than a year earlier, and 12 thousand children – 70% more.
The medical network reminds that in the first half of the year it opened two new facilities: in January, its Dobrobut multidisciplinary hospital at 12A Bazhana Avenue, and in April, the Dobrobut medical center for adults and children at 1/2 Entuziastiv Street.
In addition, in April, a new dental clinic Dobrobut Dental Clinic was opened at 14-16 Mikhnovskoho Blvd.
The chain clarifies that in 2022, the three most sought-after doctors were a general practitioner, an obstetrician-gynecologist and a neurologist, and in 2023 – a general practitioner, an obstetrician-gynecologist and an otolaryngologist.
The press release also notes that Dobrobut continues to provide free medical care to Ukrainians affected by the war. With the support of Direct Relief and the Dobrobut Foundation, 469 people have received free inpatient and surgical treatment at the Dobrobut Medical and Diagnostic Center at 3 Simi Idzikovskikh Street since the beginning of the year. In six months, Dobrobut Foundation has raised over UAH 2.4 million for the treatment of Ukrainians.
Today, the network employs more than 2,700 people.
“Dobrobut is one of the largest private medical networks in Ukraine. The network includes 17 medical centers in Kyiv and Kyiv region, an emergency service, dentistry and pharmacies. The medical centers of the network provide services for children and adults in more than 75 medical areas. Every year, Dobrobut specialists perform more than 7000 surgeries. The network employs 2700 people.
Since the first days of the war, Dobrobut’s medical and diagnostic center in Kyiv, with the support of Direct Relief International and Dobrobut Foundation, has been providing free assistance to wounded soldiers and people in difficult situations due to the war.
“Dobrobut became the first private network in Ukraine to receive funding from the U.S. federal government – with the support of the U.S. International Development Finance Corporation (DFC), the company will build a modern physical rehabilitation center.
