Business news from Ukraine

State Property Fund of Ukraine is finalizing list of large-scale privatization objects

The State Property Fund of Ukraine (SPFU) is finalizing the list of large-scale privatization objects to be agreed with the Cabinet of Ministers and submitted to the auction commission, said Vitaliy Koval, head of the agency.

“Large-scale privatization is when an asset is worth more than UAH 200-250 million at its book value or starting price. Today, the official list has been approved, all large-scale privatization objects must go through the procedure of approval by the Cabinet of Ministers, be included in the list and transferred to the auction commission under the regulation of the minister, who will approve the data on the auction conditions,” he said at the Business Breakfast with Forbes Ukraine on Wednesday.

Koval named 66.65% of the Ocean Plaza shopping mall (Kyiv), which will be put up for privatization at a starting price of UAH 1.63 billion, and one of the pre-war leaders in the aerated concrete market, AEROC Investment Deutschland GmbH, with three production sites at a price of about UAH 1 billion, as the most valuable assets included in the list of large-scale privatization. Among the state-owned assets, the Ukraina Hotel (Kyiv) will be put up for privatization at a price of UAH 1.8 billion.

In addition, the assets of the United Mining and Chemical Company (UMCC), which has been given control of the Vilnohirsk Mining and Metallurgical Plant (VGMK, Dnipro region) and Irshansk Mining and Processing Plant (IGOK, Zhytomyr region), will be auctioned at a starting price of UAH 3.7-3.9 billion.

“We have a task from the Ministry of Finance – UAH 4 billion (to replenish the state budget in 2024 – IF-U). But I am confident that we will exceed it. The ambitious price is much higher,” said the SPF head.

Speaking about the target audience that the SPF is interested in transferring privatization objects into ownership, Koval said that the Fund manages a variety of assets: from a small shop, hair salon, service center and tailoring studio to large objects such as the UMCC. Accordingly, the target audience is very diverse – from individuals to corporations.

“A very cool client for us is someone who comes for the second, third, or fourth time. In addition, when it comes to international business, international groups that already have business in Ukraine, understand the country’s agenda, and are familiar with the context and feel the microclimate are of the greatest interest. Such clients are very important to us. As well as domestic investors who have small and medium-sized businesses – they are needed,” summarized the head of the SPF.



SPFU puts Shabalynivka distillery up for privatization

The State Property Fund of Ukraine (SPFU) has put up for privatization the Shabalynivka distillery in Chernihiv region.

“This facility is a promising brownfield waiting for an investor to restore it. The privatization of the plant opens up opportunities for the development of an industrial site with existing infrastructure,” said Vitaliy Koval, head of the SPF, on Telegram.

According to the report, the plant is located in the village of Ivanivka, Nizhyn district, near the lake and the M-02 and T-2523 highways.

The single property complex includes 51 real estate objects (12,312 thousand square meters), two land plots with an area of 56.46 hectares, three cars and 250 movable property items (equipment, furniture, etc.).

The new owner is obliged to pay off the company’s existing wage arrears of UAH 552 thousand and UAH 21.17 million to the budget. The terms of the sale include the preservation of jobs for six months.

The starting price of the lot is UAH 959.1 thousand (excluding VAT).

The online auction will take place on May 16 in the Prozorro.Sale system. Bids will be accepted until May 15 inclusive.

“The privatization of Shabalynivka Distillery is a chance for investors to realize their business ideas on the basis of existing production facilities and infrastructure. The new owner will be able to diversify its activities and create added value,” said the SPF chairman.

According to the Fund, distilleries are one of the most popular small-scale privatization assets. Since September 2022, the SPF has sold 14 distilleries and raised UAH 965 million to the state budget, with the average price of each object at auction tripling.

The SPF planned to fully complete the privatization of the alcohol industry in 2023, for which it was planned to hold online auctions for the sale of 26 distilleries across the country. However, a number of them did not take place.

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Japan is interested in supporting Ukraine’s agricultural sector and training veterans

Japanese partners have confirmed their interest in projects to support Ukraine’s agricultural sector and train veterans, and the respective teams of the two countries are working together to find ways to implement these intentions, said Vitaliy Koval, chairman of the State Property Fund, following the visit of a Ukrainian delegation led by Prime Minister Denys Shmyhal to the Conference on Economic Development and Reconstruction in Tokyo.

According to a release from the Fund, its head spoke about the key areas of the agency’s work, investment proposals for Japanese business, and new projects of the SPFU team – work with sanctioned property and the Land Bank, which is scheduled to be launched at the end of this year.

Regarding the latter project, the head of the Fund had a separate meeting with representatives of the Ministry of Agriculture, Forestry and Fisheries of Japan, as the SPFU manages 386 thousand hectares of agricultural land, which should work for the Ukrainian economy and bring profit to the state budget.

According to Koval, the meeting discussed attracting Japanese investors to the Ukrainian agricultural sector, in particular, the use of their equipment, as the need of Ukrainian farmers for mechanized machinery with a capacity of up to 200 hp is very high, and the world leaders in the production of such equipment are concentrated in Japan.

“Ukragroleasing can become their partner here. The company is managed by the SPFU and can help with leasing equipment,” said the head of the Fund.

He also called on foreign partners to pay attention to one of the most important areas of work for the whole country – retraining and training of veterans, which is the management and maintenance of agricultural machinery.

Koval said that the State Property Fund has the capabilities to assist in training: it can be conducted at the SPFU’s training centers, and such facilities will become training centers for operators and service engineers for Japanese agricultural machinery.

As reported, during the visit, the Ukrainian delegation signed 56 documents related to cooperation in many sectors of the economy of the two countries.


SPFU to hold auction for Volyntorf with starting price of UAH 190.2 mln

On October 6, the State Property Fund of Ukraine (SPFU) will hold a privatization auction for the sale of state-owned enterprise Volyntorf with a starting price of UAH 190.2 million, according to the Fund’s website.

The auction will be held on Prozorro, and the guarantee fee for participation in the auction is UAH 38 million (excluding VAT).

“The State Property Fund already has experience in the successful sale of a state-owned peat enterprise. In early July, the SPFU held an auction for the sale of RivneTorf, during which 12 bidders competed. As a result, the starting price increased 4.3 times, to UAH 205 million,” the website quoted the SPFU’s deputy chairman, Sergiy Simonov, as saying.

According to the fund, Volyntorf is a profitable enterprise specializing in the production of peat briquettes. In the first half of 2023, the state-owned enterprise received UAH 90.4 million in revenue and UAH 6.2 million in net profit, and UAH 200 million and UAH 10.6 million in 2022, respectively.

As of June 30, 2023, Volyntorf had no overdue accounts payable, with current accounts payable amounting to UAH 20.2 million, including UAH 8.9 million in settlements with the budget and UAH 2.6 million in payroll.

In total, the facility includes 109 real estate units (production, warehouse, and administrative premises) with a total area of over 21 thousand square meters. The company employs 302 people and owns 164 vehicles. Volyntorf also includes a separate division, Manevychi Peat Plant.

The state-owned enterprise has special permits for subsoil use at the Zasvity Sitneluk field for 18 years and the Soyne field for 19 years.

“Peat is not a strategic fuel for the energy sector of Ukraine. Its total share in the country’s energy balance is less than one percent, according to the State Statistics Service. Therefore, the SPFU is gradually putting state-owned peat enterprises up for privatization auctions,” the SPFU explained.

As reported, on July 5, the SPFU sold RivneTorf at an online privatization auction in the Prozorro system for UAH 205 million at a price 4.3 times higher than the starting price.

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State Property Fund of Ukraine sold seaport “Ust-Dunaisk” for 201 million UAH

State Property Fund of Ukraine (SPFU) on Tuesday for the first time sold the seaport at online privatization auction in “Prosorro.Sells”: the price of “Ust-Dunaysk” has increased more than threefold – up to 201 million UAH from 60.01 million UAH. According to the information in the system, eight bidders competed for the facility. The winner was “Elixir Ukraine” LLC, associated with the working at the grain market group “Vimexim”: it bypassed LLC “Trading Company” East “and” Ukrdoninvest “, which were also willing to pay over 200 million UAH.
LLC “Metallbud Alliance”, “Seinerston”, “Tybex” and “Financial Company Concord Factoring” stopped at just over 150 million UAH, and LLC “Citadel Development” – 110 million UAH.
As noted FGI, since April 1, 2022, the port “Ust-Dunaisk” resumed its work and since then has transshipped 153 thousand tons of grain and 58.3 thousand tons of imported consumer goods for export at the design capacity of 4.1 million tons.
“This is the first port privatized in the Prozorro.Sales system. A landmark event that shows the state is ready. More than twice as much competition as the average at privatization auctions, and the multiple increase in price is a confirmation of the readiness of businesses to compete for such assets,” the director of GP “Prozorro.Sells” Alexei Sobolev said in a statement from the IGF.
The fund specified that the winner has 20 working days to pay the price of the lot after the auction. Only after the receipt of funds in the budget signed a contract of sale.
Port “Ust-Dunaisk” consists of three assets: the port in Vilkovo (Odessa region), port point “Kilia” in the city of the same name and special ships service base on Shabash Island. Loading-unloading operations are carried out at Kiliya port point, located at 54th km of the Danube River. Danube. The passport depths at the pier are 3 m, the actual depth is 1.5 m.
According to the information on the website, Elixir Ukraine LLC is engaged in the wholesale trade of chemical products. Since 2016, it has been the official representative of Elixir Zorka, a Serbian manufacturer of complex mineral fertilizers.
The company’s revenue for the first nine months of 2021 amounted to 666.87 million UAH, net profit – 50.06 million UAH.
The company is headed by Oleksandr Vikhrenko, while the beneficiary is Valeriy Vikhrenko, owner of Vimexim.

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