News (#05 May 2017)

Biznews

Transportation

Railway-ferry service between Ukraine and Georgia

The agreement between the Cabinet of Ministers of Ukraine and the Government of Georgia on establishing direct international railway-ferry service via ports of Ukraine and Georgia was approved by the Order of the Cabinet of Ministers No.230 of 5 April 2017. Previously, the international railway-ferry service between Ukraine and Georgia was carried out through the port of Kerch. Ferry crossings will be established for this purpose, through which transportation of goods will be carried out. When transporting goods via ports of Ukraine and Georgia, a single carriage document will be used SMGS, CIM/SMGS or CIM consignment note.

To coordinate actions for implementation of the Agreement provisions and ensure operational management of ferry crossings activity, the Council of Railway-Ferry Crossings between Ukraine and Georgia will be established, which will include representatives of railway and ferry companies of both countries.

Visa Policy

Visa abolition

On 6 April the European Parliament approved a decision granting Ukrainians the right to travel to the countries of the European Union without visas. For introduction of Ukraine into the list of third countries, to which liberalization of visas for citizens is applied, 521 MEPs voted in favor, 75 against and 36 abstained.

After approval of the decision by the EU Council of Ministers Ukrainian citizens will not be required to have short-term EU visas.

It is established that Ukrainians who have biometric passports (including as their second passport document) will be able to enter the EU without a visa for 90 days during any 180-day period for the purpose of tourism, visit to relatives or friends or for business purposes, but not for work. This exception applies to all EU countries, except for Ireland, Great Britain, Iceland, Liechtenstein, Norway and Switzerland.

The European Parliament noted that the decision on the visa-free regime will come into force in June, 20 days after its publication in the official EU journal.

M&A

Ukraines M&A report released

On 13 April AEQUO law firm presented the second edition of M&A in Ukraine, published in association with Mergermarket. The report provides an overview of the key trends on Ukraines M&A landscape and outlook for 2017 and beyond. Key findings include:

Helped by the improving macroeconomic environment (Ukraines GDP grew by 1% in 2016, following contraction of 9.9% in 2015), the M&A market saw an uptick, with deal volume rising from 26 to 35. Disclosed value doubled to EUR 310 million, boosted by UniCredits sale of Ukrsotsbank to ABH Holdings for EUR 281 million.

Ongoing consolidation in the financial services sector accounted for 43% of deal volume over the past two years. Outside of financial services, lively sectors included energy, agriculture, where domestic players are looking to increase their land holdings, and TMT, particularly information and communications technologies (ICT) outsourcing.

Private equity (PE) activity in Ukraine has been subdued over the past three years. And activity was fairly static in 2016, with just four deals, all with undisclosed values.

Looking ahead, the Mergermarket Heat Chart, which logs companies for sale stories from the past six months, shows that the consumer sector is generating the highest number of M&A targets (10), followed by financial services and industrial & chemicals with seven each.

21st Century Fox takes over Sky

The European Commission has approved the takeover of the British broadcasting company Sky by the American media group 21st Century Fox, owned by tycoon Rupert Murdoch, with no additional conditions.

In accordance with the December agreement, 21st Century Fox will pay about USD 14.3 billion dollars for a 61% shareholding in Sky, which it does not yet own. Therefore, the value of the British company is fully estimated at GBP 18.5 billion.

The transaction triggered heated discussions in Great Britain: the Murdoch holding already controls a number of British news houses, including The Sun and The Times, and the purchase of Sky can significantly strengthen its influence in the country. Moreover, the son of media tycoon, James Murdoch, is the chair of the Board of Directors of Sky and CEO of Fox. Minority shareholders of Sky expressed doubts about the sufficient impartiality and independence of the companys Board of Directors.

Deal between MasterCard and VocaLink

MasterCard has received permission for acquisition of VocaLink, a British payment systems operator, from the Competition and Markets Authority in Great Britain. VocaLink allows the making of immediate payments on the worlds largest financial markets. It will be launched in the USA this year. The salary of 90% of British employees, 70% of utility bills and almost all public welfare payments in the United Kingdom are paid out via VocaLink.

Energy

Memorandum on possible cooperation between Naftogaz, Eustream and Snam

NJSC Naftogaz of Ukraine and PJSC Ukrtransgaz signed a Memorandum of Understanding on joint assessment of opportunities for cooperation as to use and development of Ukraine’s gas transportation system with Snam S.p.A. (Italy) and Eustream a.s. (Slovakia).

Final decision regarding possible partnership will be taken by the Ukrainian Government according to the Law of Ukraine On the Natural Gas Market. In October of last year it was reported that two European companies were ready to take Ukrainian main gas pipelines under their management.

It was noted that gas companies from Italy and Slovakia sent their commercial offers indicating conditions of their activity as operators of Ukrainian GTS. It is necessary to single out main gas pipelines into a separate structure so as to start cooperation with the mentioned companies.

 

Finance

Project Urban Public Transport in Ukraine

On 12 April 2017 the Verkhovna Rada of Ukraine ratified agreement with the European Investment Bank worth EUR 200 million.

The total cost of the project will be about EUR 400 million. These funds are planned to be spent to update the fleet of buses, trolleybuses, trams, subway carriages, to reconstruct tram and trolleybus lines, to introduce modern fare payment system. EIB allocates EUR 200 million for the term of 22 years with a grace period of up to five years. There are also plans to raise funds from local budgets.

Utility companies of Bila Tserkva, Ivano-Frankivsk, Kremenchuk, Lutsk, Lviv, Kyiv, Odessa, Ternopil, Kharkiv, Chernihiv, as well as Sumy City Council may become beneficiaries of the project.

 

IT

Cabinet of Ministers signed memorandum with Bitfury, Blockchain Company

On 13 April 2017 the Government of Ukraine and Bitfury, a blockchain company, signed a memorandum of cooperation. The parties tentatively agreed on the transfer of state registers of Ukraine to a blockchain system.

Bitfury Group is a blockchain company with offices in the USA and other countries.

This is the second block project of Bitfury for Government bodies. In April 2016 the company signed an agreement on running the experiment with Georgia — to launch the first blockchain register to register land title. Sweden and Estonia also started using blockchain for purposes of government administration, but the Ukrainian project far exceeds them in its scale.

A reminder that in 2014 Bitfury raised USD 20 million of investment from a number of investors, and iTech Capital became an investor in Bitfury in 2015.

 

AMCU

AMCU considers case against LLC Nova Poshta International

Upon application by an individual, the Antimonopoly Committee of Ukraine is considering a case on violation of legislation on protection against unfair competition in the form of dissemination of information on terms of international goods delivery by LLC Nova Poshta International, which is misleading.

In particular, this refers to the terms of delivery of orders to Ukraine, to Nova Poshta offices in Ukraine or to customers of services in Ukraine, from the moment of an order’s arrival to the NP Shopping warehouse in the USA, as the actual term of orders delivery could be longer than this period.

 

 

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