Ukraine Plans Big Fire Sale of State Firms

Ukraine is looking for investors brave enough to bet that it can still triumph over Russia – with a simple pitch: High risk can offer high reward. 

 

The war with Russia has massively drained the Ukrainian economy with its GDP falling 30% last year. As the war ravages on, the country is preparing to sell big government-run entities at distressed prices. The aim is to shore up the aid-dependent budget and end a decades-old, post-communist legacy of corruption and mismanagement that has gravely undercut its economy. 

 

Ukraine has over 3,500 companies listed as state-owned with 1,800 of them bankrupt. Already the government are expecting to get 6 billion hryvnia ($162 million) from selling these companies this year, the head of the State Property Fund, Rustem Umerov (right) said he could potentially garner four times that amount if sales and leasing plans can go ahead – provided lawmakers approve. 

 

In fact, it has been claimed that Kiev could potentially earn more than $400 million in a best-case scenario. And another $190 million could come from leasing farmland, Umerov said last week. 

 

This plan comes with a pressing sense of urgency. And, there are 3 reasons for this. 

 

First, Ukraine must help fund its war effort and keep institutions dependent on foreign aid above water. Secondly, capital injections and management overhauls in state-owned companies can help revitalize the economy. Finally, the companies on the fund’s balance sheet, most of which were built in the middle of last century, are rapidly losing value. 

 

“If we don’t sell them this year, then next year their only value will be real estate, and in the following year, just the land they stand on”, Umerov admitted. 

 

The 41-year-old is the eighth person to take over the State Property Fund since the so-called Revolution of Dignity toppled the pro-Russian government of Viktor Yanukovych in 2014. 

 

It’s a tough job. None of his predecessors were able to achieve the goal of selling big swathes of the state-run economy. Two died by reported suicide, while a former chairman is being investigated for embezzlement charges that he denies. 

 

If parliament pushes through the laws – as Umerov and his colleagues at the fund expect – companies including ammonia maker Odesky Pryportovyi Zavod, titanium producer United Mining and Zaporizhzhya Titanium-Magnesium Plant, insulin manufacturer Indar, and power generator Centrenergo PJSC should start no later than 3Q23, he said.

 

Things are getting desperate for Ukraine!