Ukrainian M&A market stays resilient for second consecutive year — KPMG reports
In the face of ongoing challenges related to Russia’s full-scale invasion, Ukraine’s M&A market continues to demonstrate resilience and serve as a bellwether for cautious investor confidence.
. In spite of a summer marked by infrastructure attacks that have constrained growth, stable figures provide an insight into continued investor optimism; buoyed by local privatization efforts and the realization of international financial support commitments.
KPMG in Ukraine's M&A Radar report for the first nine months of 2024 notes that M&A activity has broadly remained at the same level year-over-year; with a 2.7% decrease in the number of deals compared to the same period in 2023 and a 2.9% increase in total deal value which reached USD643 million .
“Despite the challenges posed by the war, the average deal value in the M&A market is still rising. Even in the face of challenging circumstances, foreign investors are still expressing immediate interest in the growth potential of Ukrainian businesses, particularly in the technology sector,” commented Svitlana Shcherbatyuk, Director, Head of Transaction Services, Deal Advisory, KPMG in Ukraine. “As per past trends, the innovation and technology and agriculture sectors remain key drivers for Ukraine’s M&A market in 2024. This should hold true for the remainder of this year, with this forecast to be confirmed by a comprehensive market analysis presented by KPMG in Ukraine in the first months of 2025.”
Growing deal value confirms M&A expectations
Although deal transparency has declined — with only 47% of deals disclosing their value compared to 62% in 2023 — the average deal size has significantly increased, indicating ongoing market recovery since 2022 and 2023. The average transaction value in 9m 2024 rose by USD11 million: increasing to USD38 million compared to USD27million in the same period of the previous year. This trend towards larger and more valuable deals aligns with observations made in KPMG in Ukraine’s previous updates in M&A Radar H1 2024.
Ukraine looks abroad with outbound deal activity highlighting international growth
Outbound deals accounted for more than a quarter (28%) of the total transactions in this period, with Ukrainian companies continuing to diversify investments and expand internationally. Key deals include Intellias’ acquisition of UK-based businesses and its expansion into the North American market, along with Farmak making major acquisitions in both the UK and Poland. This trend of outbound investment is expected to continue as Ukrainian companies seek opportunities beyond the domestic market.
Innovation and technology sector remains attractive to foreign investors
While the number of inbound M&A deals slightly decreased, down to 10 deals in 9m 2024 compared to 13 in 9m 2023, their value surged to USD473 million; up from USD278 million in the same respective periods. Six of these 10 deals were in the innovation and technology sector, with investors from North America and Europe continuing to play a leading role. Workplace flexibility, with employees able to work remotely, has been a key factor in the IT sector’s resilience, and recent deals underscore that global confidence in the potential of the Ukrainian IT remains unshaken.
Privatization unlocks value in driving domestic transactions
Though only 25% of domestic M&A transactions have disclosed their deal values in 2024 so far, privatization efforts present a clearer view on deals involving state assets. Ukraine’s transparent auction processes via the Prozorro.Pro platform provide readily available figures that offer insights into investor interest in sectors such as agriculture and real estate.
Notable successful real estate auctions included privatisation of the ‘Kozatskiy’ and ‘Ukraine’ hotels on Independence Square which realised prices of UAH400 million and UAH2.5 billion, respectively.
Agriculture, meanwhile, remains a key pillar of investment in Ukraine, supported by significant acquisitions amid ongoing land reforms. Following successful transactions realising strong bid prices in October 2024, the State Property Fund of Ukraine plans to auction another 100,000 hectares across 20 regions by year-end, with the goal of fostering agricultural growth and ensuring transparent leasing opportunities for all market participants.
Outside of agriculture and real estate, auctions for state-owned titanium producer United Mining and Chemical Company concluded with a winning bid of UAH3.9 billion by Cemin Ukraine, a subsidiary of NEQSOL holding. This successful auction of one of the world’s largest titanium firms may be the beginning of wider privatization trends in Ukraine’s metals and mining sector, with recent government statements highlighting the privatization potential of both Demurinsky GZK and VSMPO Titan Ukraine.
International military firms find a warm welcome in Ukraine
An up-and-coming presence on the Ukrainian business landscape, Ukrainian military tech companies continue to attract funding in 2024, sourced from both the Ukrainian government and international private investors.
Foreign defence companies have also increased their presence on the Ukrainian market. German Rheinmetall have notably followed up an ammunition producing joint venture with its first armoured vehicle repair and production workshop in Ukraine, expanding its manufacturing presence and deepening the company’s partnership with state-owned defence concern Ukroboronprom. Other major defence-tech firms such as KNDS and Roshel have also recently announced plans to increase investment and open production facilities in Ukraine. These developments go beyond enhancing Ukrainian defense capabilities, providing an economic boost in the form of manufacturing and supply chains, new jobs, and international markets for Ukrainian-made defense products in the future.
Prudent planning and international aid bolsters investor confidence
While Russian attacks on key infrastructure have constrained Ukraine’s economic potential, the National Bank of Ukraine (NBU) remains steadfast in enacting policies to meet macroeconomic targets and maintain financial stability. Careful financial planning and a valiant effort on the part of Ukrainian citizens in restoring transport routes and energy facilities both contributed to the country experiencing a 3.9% GDP growth in the first eight months of 2024, though the Ministry of Economy of Ukraine forecasts a slight decline in year-end growth down to 3.5% due to seasonal post-harvest declines. Inflation, meanwhile, rose to 7.5% in August but remains within NBU forecasts, who expect that holding the key rate at 13% should encourage inflation figures to fall throughout 2025 and reach their 5% target by 2026.
International financial support also continues to strengthen Ukraine’s economic resilience, with USD24.6 billion in aid contributions in 2024 so far and total funding expected to reach USD38 billion by year-end. G7 nations have pledged an additional USD50 billion as well, a clear indication of international expectations for long-term recovery and growth.
Forecasts
As Ukraine heads into the fourth quarter of 2024, the M&A market remains stable, showcasing strong performance in key sectors such as technology, real estate, and agriculture.
“Though concerns still exist about the level of transparency in recent deals, increases in deal value and ongoing interest from international investors reflect a measure of faith in Ukraine's economic prospects, even amid current challenges. Successful privatization deals and international dealmaking offer encouraging indicators regarding further developments in the Ukrainian M&A market, as the country continues its path toward recovery and rebuilding,” emphasizes Volodymyr Maksymenko, Associate Director of Deal Advisory, Investment and Capital Markets, KPMG in Ukraine.
The full text of KPMG in Ukraine’s M&A Radar report for the first nine months of 2024 is available at the following link: M&A Radar: Ukraine. 9 months 2024 - KPMG Ukraine
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