Ukraine Starts New Era of Privatization: The Future Belongs to the Bold

A Transformative Journey Towards Economic Freedom

Since 1991, Ukraine has undergone a remarkable transformation from its Soviet-style economy to a modern, free market system. However, there are still thousands of enterprises under state and municipal ownership. Recognizing the potential for future investment and development, the Ukrainian Government is now eager to transfer these publicly owned assets to efficient private owners.

With approximately 3,300 state-owned enterprises and one million real estate properties, there is no shortage of opportunities for privatization. Most of these assets are eligible to be bought out from the public domain by private investors.

The Revival of Privatization

Despite the setback caused by the full-scale Russian invasion in February 2022, Ukraine has reinvigorated its privatization efforts. In recent months, several significant milestones have been achieved:

  • August 19, 2022: The new Law No. 2468-IX on privatization came into effect, initiating auctions for small-scale privatization under new and simplified conditions.
  • September 7, 2022: Mr. Rustem Umerov assumed the role of Chairman of the State Property Fund of Ukraine. Since his appointment, he has been committed to making the privatization process as seamless as possible for foreign investors.
  • September 19, 2022: The first privatization auction since the Russian invasion successfully took place, marking the renewal of privatization under new, more accessible terms.
  • October 4, 2022: The State Property Fund gained control of an additional 800 state-owned enterprises. These enterprises may soon be designated for privatization, according to the Ukrainian Minister of Economy, Mrs. Yuliya Svyrydenko.
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Two Different Procedures: Small and Large Privatization

Privatization procedures in Ukraine vary depending on the value of the assets involved:

  • Assets valued below UAH 250 million (approximately USD 6.2 million) fall under the category of small privatization.
  • Assets exceeding UAH 250 million are considered for large privatization.

Naturally, the privatization process for smaller assets is faster and simpler.

Bidding for small assets typically starts from the asset’s book value, which is often much lower than its actual market value. This presents excellent opportunities for investors to acquire valuable assets at discounted prices.

The Ukrainian Government has already approved a list of 20+ state enterprises that are eligible for large privatization. Detailed information and photographs of these assets can be found on the State Property Fund’s website. The website also allows users to filter assets by region, starting price, auction date, and other criteria.

The State Property Fund manages the list of assets for small privatization, categorizing thousands of assets within several lists. Many of these assets have already been cleared for auction and can be accessed through the Fund’s privatization portal, which provides photographs and detailed descriptions.

Additionally, the Fund publishes monthly investor digests that advertise the most attractive assets available. Check out the October 2022 digest for more information.

Investors Hold the Reins

In addition to the listed assets, investors have the opportunity to initiate the privatization of any state or municipal asset through the specified statutory procedure. If there are no legal restrictions, the State Property Fund or local self-governing bodies will include the target asset in the list and initiate the auction.

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Ukraine offers a valuable tool called ProZorro.Sale, an online platform that ensures complete transparency and eliminates corruption-related risks. This platform continues to facilitate auctions even during times of conflict. All auction announcements are published on the Fund’s privatization portal. Potential buyers can submit documents, place bids, and participate in auctions online. With proper legal assistance, privatization in Ukraine becomes a convenient and investor-friendly process.

A Golden Opportunity

Despite the ongoing war, Ukraine presents a perfect investment opportunity. The new simplified privatization mechanism enables investors to make advantageous investments in an economy poised for growth. It is a win-win situation for all parties involved. Investors gain access to a market with great potential, while Ukraine receives the necessary funds to support its economy during the war and expedite recovery after an expected victory.

As President Ronald Reagan once said, “The future doesn’t belong to the fainthearted; it belongs to the brave.” Ukraine embodies true bravery and warmly welcomes bold partners and investors.

Click here to learn more about Garrity Traina, your trusted partner in navigating Ukraine’s privatization landscape.