KYIV – With Mikheil Saakashvili barging through Ukraine’s Western border on Sunday and 100,000 Russian troops ‘exercising’ above Ukraine’s northern border on Friday, it is hard to keep your eye on Ukraine’s business ball.
But, distractions aside, this fall is shaping up as the season when outside investors take serious, second looks at Ukraine.
The change in attitudes was captured by Institutional Investor’s August survey of 214 fund managers at 154 investment companies. The top choice country to visit in the next 12 months was….Ukraine.
A whopping 52.5 percent of hedge fund managers say they plan to come here in the next year.
“My expectations have been exceeded in all of my meetings,” Tim O’Regan, a Manhattan-based placement agent, said after a trip here. O’Regan is helping an American and a Ukrainian here raise capital for a new ‘agnostic’ fund, selecting the most promising projects in agriculture, tech and other export-oriented companies. "It's clear that there is a disconnect between what the talking heads portray and what's happening on the ground, and that Ukraine has a tremendous amount of potential."
"My concern is that it's quite possible the country will still have that potential in another 10 years if it doesn't play its cards right," he continued in an email from New York. "It appears as though the economy is finally stabilizing and formal GDP numbers are grossly understated."
The Institutional Investor survey reflects what the UBJ sees anecdotally.
“We go around the world looking for different investing opportunities in uncrowded markets,” reads one email that came in last week. “Kiev is obviously an uncrowded market, from an American perspective…[Our] total group is about 100 people who are mostly accredited investors from around the world (just under 20 countries on last count). The members who will actually be going on this trip will be about 15-20.”
An email from another American coming to Kyiv next week for the first time, starts: “I manage global equities in Chicago. Will be interesting to get your perspective.”
In a third email, a British real estate investor invited this writer to set up and manage a residential real estate fund in Kyiv.
Another indicator of investment interest is the fall business conference season, which starts this Friday with Victor Pinchuk’s annual Yalta European Strategy, at Mystetskyi Arsenal. Russia’s “Zapad” military maneuvers start the same day and undoubtedly will overshadow conversations. But a main conference topic is to be Ukraine’s new free trade pact with the EU, now two weeks old.
Next month, from Oct. 5 to 6, the Kiev International Economic Forum is to draw 1,500 attendees this year, double the number of 2015. Having outgrown its traditional home at the Hilton Kyiv, the Forum will take place this year in Parkovy Conference Center.
With international air service expanding and foreign visitors growing, Radisson plans to open in October its 200-room Park Inn near the Olympic Stadium.
At Kyiv’s four and five star hotels, general managers report strong conference bookings this fall, often requiring 6-week advance notice for a booking.
In another indicator of foreign investor interest, Regus, the temporary workplace company, reports low vacancy rates at its five business centers in Kyiv. Last month, at Regus Podil, a two-floor center, only one office space was vacant.
In one sign that foreign investors believe that Ukraine assets have bottomed out, Tim Louzonis, the American co-founder of AIM Realty, reports his agency worked with 30 foreign apartment buyers this summer – three times the level of one year earlier.
“We had one guy, an asset manager in Asia, who studied Kyiv on the internet,” Louzonis recalled. “On his very first trip to Kyiv he came ready to buy and prepared to authorize us to act as his exclusive agent.”
“Our bread and butter used to be renters, now we are thinking of working primarily with buyers,” continued Louzonis, a resident of Ukraine for almost a decade. “The question we are getting from expats living here is: ‘how much longer do I have to buy?’ My answer is: ‘six to nine months.’”
Posted Sept. 20, 2017