As Ukraine experiences a period of relative tranquility following a tumultuous year, its M&A sector has witnessed surprising developments, and ongoing discussions about war insurance are also showing promise, according to Asters Co-Managing Partner Oleksiy Didkovskiy.
"The past few months have been relatively calm in many Ukrainian regions, although the air raid sirens frequently go off, and the military movements in the Black Sea region remain active," Didkovskiy begins. "Compared to the intense and frightening experiences of the previous year, the situation is more manageable now. Over the last three months, people have been gradually returning to Ukraine. While safety and security concerns persist, it is encouraging to see an increasing number of women returning with their families."
The question that Ukrainian law firms are now facing, according to Didkovskiy, is what will be the next potential line of work: "our current workload is diverse and not concentrated in high volumes in areas such as regular corporate and M&A or real estate. However, we have noticed a growing demand for litigation work, primarily aimed at recovering damages." According to him, "it is challenging to navigate the complexities and uncertainties of these cases, which is why local law firms maintain contact with international law firms so that they can collaborate effectively and financially as a team before these tribunals to successfully recover damages."
Surprisingly, Didkovskiy notes, there has still been an increase in interest in M&A in the past two months. "From an economic and banking perspective, the situation is pretty challenging due to the increased regulations and difficulties in extracting resources from the country," Didkovskiy says. "In light of that, investing capital locally seems to be a good idea, considering it is not possible to export the capital generated here. Even foreign investors cannot easily distribute dividends, resulting in a huge accumulation of money in Ukraine. Therefore, there is an increased interest in growing the company locally. Although unexpected, this is the reality that we are dealing with."
"Additionally, over the past few months, investment banks and large international institutional investors have shown a particular interest in coming to Ukraine," Didkovskiy adds. "However, it is unclear how much money is needed, and there are risks related to the ongoing war and other factors." He highlights that "to address this, there are also talks of war insurance to secure the big international funds and investors from the natural war risks they are likely to face."
Ultimately, Didkovskiy points to the agriculture and IT industries, as the most resilient sectors: "the agriculture sector has been active, and the IT industry continues to grow, particularly in the western regions. This is what we have observed, and we expect it to continue for the foreseeable future."