Kreston Ukraine
April 11, 2024
April 11, 2024
As the Managing Partner at Kreston Ukraine, Sergey Atamas brings over 20 years of experience in Management Consulting, Corporate Finance, and Business Transformation. He drives business strategy, leads investment, and consultancy practices. Sergey’s expertise spans Equity and Project Financing, IT Strategy, Business Planning, and Customer Analytics. He has notable industry experience in IT, telecommunications, manufacturing, energy, consumer products, and logistics, contributing significantly to Ukraine’s evolving business landscape.
January 4, 2024
Signs of Ukraine’s economic recovery may come as a surprise to some. Since February 2022, the global economy has felt the impact of the Russia-Ukraine war. From oil prices to the lack of grain, many countries have been grappling with supply chain issues.
Unsurprisingly, it has been Ukraine’s economy that has felt the keenest impact, as articulated in a recent interview with Sergey Atamas from Kreston Ukraine. Atamas presents a narrative of resilience and strategic redirection. “Initially, we lost about 50% of our clients almost overnight,” Atamas reveals, highlighting the immediate impact of the conflict on Ukrainian businesses. However, the global response was swift and transformative. Kreston Ukraine, for instance, reclaimed 90% of its pre-war income within one and a half years.
Contrary to the grim forecast of a 50% GDP plummet, Ukraine managed a more modest decline to 29% in 2022, with projections of a 4.7% growth in 2023. This surprising resilience, Atamas notes, is credited to “unprecedented financial assistance from allies, increased government spending, and the liberation of territories.” Domestic borrowing and international support have played crucial roles, with the former surpassing $11 billion and the latter reaching $33.8 billion in 2023.
Ukrainian businesses redesigned their models almost overnight, Atamas explains,
“To stay afloat, Ukrainian businesses had to reconfigure internal processes and resort to crisis management. Some popular measures include adapting business strategies and focus to current market needs, expanding the customer base and target audience, going to international markets and seeking financing/investments or new partners.”
Atamas also highlights the role of technology in Ukraine’s adaptive strategies. Significant resources are being funnelled into military technologies and security projects. He has even launched his own new business recently, “Growexa is a SaaS platform oriented towards sourcing projects globally, providing investors with a detailed search system and in-depth AI-based analytics.”
Despite the intervention, certain sectors have borne the brunt of the conflict more than others, Atamas explains, “The metallurgical industry, a cornerstone of Ukraine’s economy, saw a 70% reduction in 2022. The energy sector, targeted heavily since late 2022, experienced a 90% drop in electricity exports. Agriculture, another key sector, faced losses exceeding $40 billion.” Atamas points out the necessity of “adapting business strategies and expanding the customer base” as vital survival tactics for businesses.”
Aside from the challenge of keeping the Ukraine economy moving in order to not adversely affect citizens already dealing with the challenges of living with war, Atamas explains, international investors paused activity, but did not stop entirely, “In 2022, foreign direct investment inflows were 5.8 times lower than in 2021, amounting to $1.1 billion, with an outflow of $529 million. In 2023, the situation significantly improved, with inflows reaching $2.4 billion in six months and outflows totalling only $19 million.
Despite the wartime risks, investors are willing to invest in new Ukrainian projects. Polish logistics operator Laude relocated assets worth €100 million to Ukraine after closing its business in Russia and plans to increase investments. German company Pfeifer & Langen will acquire its sixth sugar plant in Ukraine and German company Bayer is investing €60 million to expand its facilities in the Zhytomyr region.
Allies have also been particularly supportive in encouraging Foreign Direct Investment,
“Bpifrance Assurance Export will provide insurance for French businesses investing in Ukraine, covering up to 95% of investor asset losses or debtor obligations. The main condition is active participation in Ukraine’s reconstruction before the end of the full-scale war.”
Atamas advises leveraging the country’s investment incentives for foreign entities looking to invest in Ukraine, including substantial state support and tax exemptions.
“Investing in Ukraine can still be pragmatic even during wartime,” he asserts. The recovery process, he suggests, will be bolstered by international efforts like the European Commission’s Ukraine Assistance Fund and collaborations with firms like BlackRock and JPMorgan Chase in establishing a reconstruction bank to attract $400 billion.
Atamas believes that the government is also being assertive with incentives to tempt investors back into Ukraine, with “up to 30% state support for capital investment, infrastructure development, and corporate income tax exemptions for up to 10 years.”
Despite the encouraging first signs, Atamas is clear that the road to recovery for Ukraine is still in its infancy. “In early 2023, the World Bank estimated Ukraine’s reconstruction and recovery needs at around $411 billion for the next decade. Ukrainian and international private companies are expected to contribute to infrastructure development and economic revival in Ukraine.
The European Parliament has supported the European Commission’s initiative to create a special Ukraine Assistance Fund of up to €50 billion. This fund is intended to provide stable and predictable financial support to Ukraine from 2024 to 2027, including direct grants, credits, mobilisation of private investments through guarantees and blended financing.”
There has been sobering scenario planning to shore up the economy whilst there is still active combat, Atamas describes the most likely as, “Active combat with Russia until 2025 with minimal front-line changes. In this scenario, Ukraine’s economy will continue to recover over the next two years, with modest GDP growth. However, the approaches to transforming the economy and creating conditions for foreign private capital to drive Ukrainian investment projects are currently being developed. An economic boom is expected from 2026 onwards.”
If you already doing business in Ukraine, or would like to expand into the region and would like to talk to one of our experts, please get in touch.
This guide is an overview of the UA’s Value Added Tax (“VAT”) system, focusing on how it affects foreign businesses trading with the UA. It is general in nature and unlikely to cover the specifics of your scenario. It should be read as such and not be construed as advice. For advice as to how your business is affected by UA VAT, please contact a Kreston UA VAT specialist.
November 3, 2023
June 30, 2023
Kreston Global is pleased to share that Olena Nikolaieva, Director of Quality at Kreston Ukraine, has been elected to the Board of the Audit Chamber of Ukraine. This notable achievement was announced at the regular Congress of Auditors held in Kyiv on June 24, 2023.
The Audit Chamber of Ukraine is a self-regulatory organisation that oversees the national auditing profession. The Board plays a crucial role in maintaining and enhancing the standards of auditors’ professional activity, ensuring their independence, and promoting the development of the audit profession in Ukraine.
In the current challenging times, the auditing profession remains a key pillar of financial stability in Ukraine. The role of auditors in ensuring the reliability of financial statements is essential for both Ukrainian society and those who support the country.
Olena’s election to the Board is a great example of Kreston Ukraine’s ongoing commitment to the development of the auditing profession in Ukraine and contributing to the growth and integrity of the profession.
We congratulate Olena Nikolaieva on her new position and acknowledge her exceptional work in the field of auditing. Her dedication to upholding professional standards sets a valuable example, and we look forward to her contributions in her new role.
Find out more about doing business in Kreston Ukraine, or get in touch with the team directly.
June 27, 2022
Sector: Finance
Sergey Atamas, managing partner of Kreston Ukraine, explains how Ukrainian accountants and auditors are dealing with the ramifications of the war. Read the full article here.
April 17, 2022
Sector: Finance
The Marshall plan initiative, created by members of Kreston Ukraine, is a critical part of economic recovery. A robust strategy will give the economy a chance to recover when the war one day comes to an end.
Liza Robbins, Chief Executive, Kreston Global and Sergey Atamas, Managing Partner, Kreston Ukraine report.
October 27, 2021
Kreston Ukraine and the Ukrainian Venture Capital and Private Equity Association (UVCA) present the Ukraine venture capital and private equity markets 2020/2021 review.
According to the results of 2020, Ukrainian technology companies and their investors closed 188 deals with investors worth USD 533.5 million. About 50% of the deals are small grants (25 and 50 thousand USD) from the Ukrainian Startup Fund. For 2020—2021, it has invested USD 5.3 million in Ukrainian projects.
Just three years ago, Ukraine did not have a single unicorn among its startups. Nowadays, as many as five of them — Gitlab, Grammarly, Bitfury, People.ai, and Ring — raised USD 1.3 bln funding and dominate the global market.
In this review, we analysed the key market trends, such as “investment focus on software projects”, “increase of foreign investors in the Ukrainian market”, “growing quality of Ukrainian startups and their interest in smart money” for the first time. The key drivers and barriers to market development were identified — the respondents noted that despite the imperfect regulatory framework, the country still has enough private capital to promote the sector.
Generally, all market players are unanimous in their outlooks and are quite optimistic about further market development. According to 81% venture and 67% private equity investors surveyed, all quantitative indicators are likely to grow, and high-tech industries traditionally represent the most promising ones.
Ukrainian investors primarily point to the experience and qualification of the team (according to 94% venture and 17% private equity investors surveyed) and the market potential of the business idea (according to 82% venture and 83% private equity investors surveyed), among the key factors for investment decisions. On the other hand, when choosing an investor, startups consider their industry expertise, investment terms, and ‘smart money’ they can get.
The study results show that Ukrainian companies offer attractive, relevant, and globally competitive solutions and demonstrate sustainability and adaptability in COVID-19. Ukraine is gradually transforming from a talent and idea exporter into a big international venture capital market player.
Sergey Atamas, managing partner of Kreston Ukraine: “Outsourcing and outstaffing models in Ukraine demonstrate steady growth and sustainability, but consume almost all available 200 000 IT specialists. There are high chances of creating a robust venture capital ecosystem in Ukraine when the focus of Ukrainian IT companies, following the example of Accenture, is shifted to the consulting area through investing in innovation centres and searching for new digital transformation solutions.”
September 29, 2021
June 22, 2021