Privatization of profitable enterprises in Ukraine is low-hanging fruit, but not for foreign investors. A chemical factory seized from a Russian oligarch will be put up for auction this year.

 PJSC Vinnytsiapobuthim, a well-known manufacturer of household chemicals and cosmetics, has been transferred to the State Property Fund of Ukraine (SPFU) for future sale at auction. This was reported by the Asset Recovery and Management Agency’s (ARMA) press service. The Vinnytsiapobuthim enterprise was seized and transferred to ARMA’s control in July 2022 and is currently being operated by Kraytex-service, which won an asset management competition in December 2022. The Antimonopoly Committee approved the asset’s transfer to ARMA in April of 2025.

Between May 2023 and July 2024, the state agency reported monthly revenue of almost UAH 8M, providing annual revenue of nearly UAH 80M ($1.9M). According to a statement from ARMA, “This enterprise is a clear example of effective management and ensuring revenue for the state budget and the possibility of providing the sale of a sanctioned asset.” The company’s revenue from the previous year will be evaluated and the enterprise will be put up for auction in 2025.

Several financial analysts have expressed some concern after examining the attractiveness of the state asset.  The revenue from the Vinnytsiapobuthim factory in 2020 and 2021 was UAH 880M and UAH 850M, respectively, with a net income of UAH 140M ($5M) and UAH 115M ($4.1M). The enterprise’s income is currently at least 60% less than before the asset was seized from its previous Russian owners. Due to the lower cash flow, the chemical plant will have a lower evaluation value and might be a good investment opportunity if the price is right.

To get a fair market price, the State Property Fund will officially place assets in public auctions in order to receive as much money as possible for the state. However, to receive a higher price, investors should have access to the premises and time to examine the factory. So, will interested parties have enough time to evaluate the company, visit it, and investigate its facilities to understand whether the company is worth the price that is being offered?

Typically, if this is a large asset and part of Big Privatization, the State Property Fund announces an asset’s sale 60 days before the live auction takes place. Corporations outside of Ukraine have refused to participate in this auction due to limited information available about the asset and the very complicated and lengthy procedures that are required to perform their due diligence. These processes usually take months to complete, and another few months are required to receive internal approval from corporate decision makers and multiple layers of management that are needed to acquire the asset. This is why companies or individuals with cash in hand can buy a very profitable company for $15-$16M with a potential net profit of $4M per year, a 20-25% ROI.

Can we call this environment investor-friendly? Probably not. Is the state agency doing something wrong? Probably not. That is why it is impossible to sit in London or NYC and successfully invest or do business in Ukraine. If you want investments with high returns, you have to be here, in Ukraine, act quickly, and invest now while everyone else hesitates, too inflexible to adjust to Ukrainian realities.