Foreign investors leave Ukrainian M&A market

Foreign investors are lately in no hurry to enter the Ukrainian market, and those investors already present in the country are leaving in fear of further “economic shocks” resulting from the unstable political situation in the country, the Ukrainian financial portal Bin.ua wrote April 1.

“Over the last three months, several investors from Italy, Germany, Cyprus, Canada and Russia, including the German hypermarket chain Praktiker, which was initially bought by the Ukrainian Kreston Guarantee Group, have left the Ukrainian market,” according to Bin.ua.

Most M&A deals in the first quarter of 2014 were merely redistributions of assets between the current Ukrainian owners.

Continued M&A activity is seen in sectors such as banking and finance, with larger companies acquiring smaller or less successful competitors, according to Miroslav Tabakharniuk, the chairman of supervisory board of MT-Invest, which is a specialized M&A market operator.  Tabakharniuk thinks that it will not be possible to avoid forced sales of companies resulting from the unstable political and economic situation in Ukraine, with many owners looking to divest unprofitable businesses.

The largest public M&A deals in the first quarter of 2014 were in the financial sector. The most significant was sale of the Bank of Cyprus, whose assets were transited from one foreign owner, Cypriot Bank of Cyprus, to the Russian Alfa Group, the portal wrote.

Another foreign investor, Italian group Intesa Sanpaoplo sold Pravex-Bank to Group DF holding. Reportedly, the Italian company was “ready to do anything just to get rid of the Ukrainian asset,” therefore it sold for almost seven times cheaper than what it paid in 2008. In total, those two deals provided 99 percent of the Ukrainian M&A deal volume.

For the first quarter of 2014, the number of deals with Ukrainian buyers has decreased more than twofold, according to the Dealogic quarterly report.