Agriculture leads the investment boom in Ukraine
Ukrainian agricultural assets in 1H 2018 were number one in terms of attractiveness in opinion of the investors. This was stated by the First Deputy Minister of Agricultural policy and Food of Ukraine Maxim Martyniuk.
“In the 1H 2018, agriculture continued to outpace the national economy of Ukraine in most basic indicators. Considering the economic growth that began as a whole in the country, this gap will be narrowed by the end of the year, but not so much as to offset the clear leadership of the agriculture among other industries“, — he said.
The dynamics can be seen at once by several cross-confirming parameters: the growth rate of GDP, capital investments and part of agricultural operations in the total number of M&A.
“According to the State Statistics Service, in the 1H 2018, the Ukrainian agricultural sector grew in real terms (relative to the first half of 2017) by 11%. At the same time, real GDP as a whole is only 3.5%. Obviously, such real growth rates can be maintained only with appropriate investments in the industry“, — added Maxim Martyniuk.
Also, in January – June, the increase in capital investments in agriculture was 9.4%. On the face of it, this is lower than in the economy as a whole (26.5% in the first half-year period). However, such an imbalance is associated with a high comparative base for agricultural sector, in which the investment dynamics were significantly higher than the industry average.
“In absolute terms, capital investments in the agricultural complex amounted to UAH 26.9 billion, which is almost 13% of all capital investments in the Ukrainian economy. It is important that this impressive value, with a time lag of 1-2 years is transformed into the volume of production. Therefore, it can be considered not only as an attractiveness assessment of the industry for the investor, but also its future growth rate“, — stressed Martyniuk.
In terms of the capital investments ratio to the value added generated in the industry, the agriculture with a 19% indicator at the end of 2017 shared the third place with transport, second only to industry and construction.
“At the same time, the statistics of capital investments do not reflect the dynamically growing number of M&A transactions in agriculture since 2016, in particular, the purchase by SALIC of Mriya Agroholding. This agreement is remarkable not only by its value (FT, referring to its Kyiv correspondent, name the transaction cost of $ 242 million, which makes it the largest in the Ukrainian agriculture), but also by the fact that it closed a long-term problem that could potentially frighten investors away“, — he thinks.
The agreement itself testifies to the recovery of the investment climate, since the owners of Mriya's debts, for which the agricultural business is non-core, waited for the economy to stabilize and rebuild the country in order to start getting rid of this problematic asset.
Also, the First Deputy Minister clarified that, according to KPMG estimates, the total amount of M&A transactions in the agricultural sector last year increased to $ 452.5 million, or 41% of the total amount of this segment of operations (compared with only 15% in 2016). The TOP-3 agreements were concluded in the horticulture sector and associated infrastructure facilities.
Original news: http://agroportal.ua/news/ukraina/mnenie-agrarii-vozglavili-investitsionnyi-bum-v-ukraine/