Privatization Without Illusions: Investors Focus on Risks and Potential, Not Just Numbers – Volodymyr Kolot for Delo.ua

Vladimir Kolot, a partner at Agro Gaz Trading, explained in an op-ed for the business portal Delo.ua why the starting price of state-owned assets in Ukraine is not a key factor for investors during privatization.

According to him, public discussion surrounding the privatization of large industrial enterprises often boils down to the starting price, but for investors, something else is fundamentally important—how that price is determined and what lies behind it.

“What matters to investors is not the formal accounting valuation, but the extent to which it reflects the real risks, prospects, and economics of the project,” Kolot notes.

The AGT partner points out that the starting price of assets put up for privatization in Ukraine is based on book value indicators in accordance with current legislation, which does not always align with market logic.

As an example, Kolot cites the situation with the Odesa Port Plant (OPP), whose starting price in 2025 was 4.5 billion UAH. However, this figure was calculated when production was halted, and OPZ’s operations are currently limited to certain auxiliary functions and logistics activities, with economic efficiency not exceeding 5–10% of the plant’s core capacity.

At the same time, according to Kolot, the investor evaluates the asset not based on formal indicators, but through a series of parameters—production volumes, cost of production, technical condition, investment needs, and risks.

“Without access to the full range of technical and financial information, including the ability to conduct an audit after signing a non-disclosure agreement (NDA), no investor can accurately assess what assumptions are embedded in the price,” emphasizes the AGT partner.

Kolot also stresses that transparency of the process and clear rules of the game are key to successful privatization. In his view, current approaches to setting the starting price need to be revised to reflect the realities of the investment market, especially in wartime conditions.

“Effective privatization is not a number in the auction protocol, but the asset’s ability to operate after the sale and create added value for the economy,” concludes Volodymyr Kolot.

Read the full column here: https://delo.ua/economy/privatizaciya-bez-ilyuzii-yak-investor-ocinyuje-vartist-promislovogo-aktivu-463107/