Biznews

M&A

Kernel Holding buys second largest owner of grain carriers after Ukrzaliznytsia

Kernel Agro Holding has acquired a 100% stake in Rail Transit Cargo Ukraine, a rail provider, for USD 64 million.

Minus working capital and net liabilities, Kernel paid USD 49 million to acquire the rail provider, and the remaining sum is payable subject to the fulfillment of certain conditions.

It is expected that the acquisition will increase EBITDA by USD 20 million per annum, and will reduce Kernel’s logistics costs and ensure uninterrupted and high-performance grain supplies from internal storage to ports. It is noted that export volumes will rise once the company puts the terminal TransGrainTerminal located in a Black Sea port into operation.

 

Ukrgasbank sold building of famous Arsenal plant

Ukrgasbank has sold building No. 4 of the Arsenal plant located in downtown Kyiv for more than UAH half a billion through OpenMarket (SETAM state enterprise).

The tender involved the legendary plant and a plot of land (1.36 ha), which are located in the historic heart of the capital.

 

Dragon Capital acquired logistics complex outside Kyiv

Dragon Capital Investments Limited, part of Dragon Capital Group of Companies, has closed a deal on the acquisition of Arctica Logistics Complex from the state-owned Oschadbank.

The logistics complex, with a total area of 21, 500 sq. m., was put into operation in 2011.

The facility was acquired from Oshchadbank during a tender organized by the state-owned electronic trading system SETAM.

Arctica Logistics Complex became the ninth facility in Dragon Capital’s warehouse portfolio, which has grown to 300,000 sq. m over the past 2.5 years, including 40,000 sq. m of cold storage facilities.

 

Energy

European Commission approved synchronization of Ukrainian and European power systems

The European Commission approved synchronization of the Ukrainian and the European energy markets.

On 20 March the European Commission adopted Annex No.27 to the EU–Ukraine Association Agreement making synchronization of energy markets possible.

At the end of 2018, the Cabinet of Ministers approved a plan for the synchronization of Ukraine’s Integrated Power System (IPS) with the European Network of Transmission System Operators for Electricity (ENTSO-E).

For this purpose, the following is planned: preparation of TPP for work within ENTSO-E, organization of communication channels for IPS technological management, construction of overhead lines and substations, certification of the transmission system operator (NEC Ukrenergo), transition to independent cooperation with power systems of countries outside ENTSO-E (Russian Federation, Belarus), and attraction of international technical assistance.

ENTSO-E (European Network of Transmission System Operators for Electricity) was established in 2009. It united six industry associations which existed back then, which included 41 system operators from 34 countries.

 

Brexit

Financial companies move over USD one trillion from UK to EU

According to research conducted by the New Financial Analytical Center, more than 275 financial companies have withdrawn assets totaling USD 1.2 trillion from the United Kingdom and moved them to the EU.

The research indicates that 10 large investment banks are transferring GBP 800 billion (or almost 10% of the country’s assets) to the EU. Insurance companies withdrew GBP 35 billion, while asset management companies have taken out GBP 65 billion.

More than 250 companies have created new headquarters on the Continent, and more than 210 of them have established new legal entities or applied for new banking licenses.

As a result of Brexit, 5,000 employees are moving or are expected to be employed at new places of work. Researchers claim that this number will continue to grow in years to come.

About 100 financial institutions and companies have chosen Dublin as their official seat, 60 — Luxembourg, 41 — Paris, 40 — Frankfurt-am-Main, 32 — Amsterdam.

 

Competition

Spotify files claim against Apple to European Commission

Spotify, the Swedish Internet service, has filed a claim against Apple to the European Commission, as it believes that the American corporation applies non-competitive practices.

“Over recent years, Apple has introduced rules to its App Store to intentionally limit choices and chill innovations at the expense of user experience — technically it acts as a player and a judge, therefore, deliberately disadvantaging other application developers,” Daniel Ek, founder of Spotify, the Swedish online music streaming service, wrote in his blog.

He noted that the company tried to address the issue with Apple directly but in vain. In its claim, Spotify criticizes Apple for charging fees from third-party developers to allow in-app purchases conduct. The Swedish company was forced to raise its prices for users. The online service did not specify the amount of damage inflicted on it by Apple.

Earlier Spotify complained of the way it was treated by the American corporation in the App Store. Three years ago, Apple canceled the Spotify update release in favor of its own music service. It also blocked the Swedish company in the Siri, Homepod and Apple Watch systems.

 

International Tax

EU updated offshore zones list

On 12 March Finance Ministers of the European Union updated the blacklist of tax jurisdictions violating transparency criteria for doing business.

Over the course of 2018, the European Commission assessed 92 countries based on three criteria: tax transparency, good governance, and real economic activity, as well as based on such an indicator as the existence of a zero corporate tax rate.

Following the Commission’s review, ministers added 15 countries to the blacklist: American Samoa, Guam, Samoa, Trinidad and Tobago, United States Virgin Islands, Barbados, United Arab Emirates, and the Marshall Islands, Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu, and Dominica.

In 2019 other 34 countries, which are on the gray list at present, will be monitored further.

The European Commission says that further selection will be empowered through compliance with mandatory transparency criteria, and the next assessment will include three G20 countries — Russia, Mexico and Argentina.

As for the consequences, Member States have agreed on a series of countermeasures applicable to the listed countries to be chosen at the discretion of the states, including enhanced monitoring and inspections, tax collection, special requirements for documentation, and provisions on the prohibition of abuse.

The Commission also reminds that new EU law provisions prohibit directing or transferring EU funds through organizations located in countries included on the blacklist of tax jurisdictions.

 

Banking & Finance

EBRD and EU to provide loans to small and medium business sector in Ukraine

The European Bank for Reconstruction and Development and EU will launch the EU4Business–EBRD line of credit in Ukraine, which is intended to finance small and medium enterprises (SME). The total sum of credit is EUR 60 million.

EU4Business–EBRD is being created to support private companies established in Ukraine and employing up to 250 persons. Borrowing entities will be granted long-term loans of up to EUR 3 million in UAH equivalent. The EBRD has noted that the provision of credits in local currency will protect borrowing entities from currency risks.

Loan funds will be provided through Ukreximbank, for which purpose it has been allocated the equivalent of EUR 22 million and OTP Leasing with an allocation of EUR 10 million. Additional loan resources of approximately EUR 28 million are expected to be transferred in the near future, and to be available to other local financial institutions that will sign up to the line of credit.

 

Ukrainian bank conducted first currency swap with client

On 21 March, for the first time in the history of the financial market of Ukraine, a Ukrainian bank conducted a currency swap transaction with a client in the UAH-USD format. The Bank conducted the first test transaction with one of the largest Ukrainian exporters of agrarian products.

A reminder that a swap is a currency exchange involving the obligation to conduct a reverse conversion after a certain time. The transaction became possible due to new currency liberalization activities.

 

Sanctions

Trump prolonged sanctions against Venezuela

US President Donald Trump has revealed that the US administration has prolonged its sanctions against Venezuela.

A reminder that the ban on the first group of Venezuelan officials to enter the USA was introduced in 2014 for dispersing large-scale protests. The Venezuelan Presidential Administration was blamed for tolerating corruption, food shortages and high crime levels. Eventually, sanctions were enhanced and prolonged.

In January 2019, against the backdrop of the continuing crisis, Huang Guaido, the Venezuelan opposition leader, declared himself to be the acting President. He was supported by the USA and many European countries. Russia, China, Turkey, and Cuba consider Nicolas Maduro to be the legitimate President of Venezuela.