UBBC and CMS’ webinar on ‘Investing and doing business in Ukraine.’

UBBC and CMS held a webinar to inform businesses and investors of the opportunities to do business in Ukraine, based on CMS’s extensive report. Ihoer Olekhov, partner at CMS Ukraine, led the discussion and outlined the climate for investment and sector developments currently emerging. He was complemented by UBBC members, Yannis Kyriakopoulos of Piraeus Bank, and Simon Cassey of Burns and Wilcox insurance.

Key insights that emerged covered Ukraine’s rapid evolution towards internationally compliant banking and financial compliance, with over 95% of banks up to international standards, and of whom 91% enjoying good liquidity and profitability. Furthermore, Ukraine is now over 75% compliant with Eu regulations and on the pathway to accession. New initiatives also include favourable PPP policies for private capital to work with local governments in areas such as schools, hospitals and transport projects, defence and demining.

In relation to the US- UKR extraction agreement, there is flexibility for other nations and businesses to contribute to extraction, if the USA passes on their priority option.

The main areas for investment priorities include Infrastructure, Renewable Energy, Agriculture, Digital Infrastructure, Cyber and Defence. The last of which has evolved rapidly and is now exporting equipment, including drones, where Ukraine has innovative international leadership.

Ihor mentioned investment has increased among companies and entities already operating in Ukraine – as they seek to strengthen their position and trading during the war. The implication is that those who are prepared and know the Ukrainian market will benefit significantly when any ceasefire occurs, and that they can see the immediate and medium-term opportunities for investment before the price of entry rockets. In contrast, external and international players yet to enter Ukraine are still reticent and cautious. To support the panel discussed the cost of rebuilding ( up to $1trillion) and the cost of insurance guarantees ( $1trillion) which implies there must be big money invested in rebuilding – not withstanding $300bn Russian assets- Ukraine will need international investment from the West and main global players, which will precipitate a bonanza for those operating in the country. Yannis echoed this sentiment, adding that certain sectors are still busy, including defence tech, food and security in particular but there is a time gap between what is needed now and how long it takes to put insurance and finance in place from external sources for up to $350bn. Currently it’s the local businesses who are doing the investment and those who are on reconnaissance, like asset managers.

Simon Cassey mentioned that there must be a much bigger pool of sovereign investors to pool the liabilities for Ukraine through Reinsurance. Currently the market only bears losses for ‘things that move’ like vessels, rail, transport and export items, and is limited in its extent – perhaps to $20m internally among 10 insurers in Ukraine, but the liabilities could reach $1trillion with land-based assets, which is too much for the private markets to bear. He proposed setting up a PoolRe system for Ukraine, like the LSE did in 90s.

The overall sense of doing business is to ‘be prepared’ as the war could end anytime, and those who know the market and have done their research or already invested will be in a much stronger position to capitalise on the inevitable boom that will follow peace and be first served. Ihor ventured that the Germans, Poles and Americans are currently best placed to benefit along with those companies already vested in Ukraine.

 For more detailed information please access the report here and view the video

below.

UBBC webinar: Investing and Doing Business in Ukraine