Czechs eye Ukraine’s Nord appliance producer

At least half of the largest Ukrainian manufacturer of refrigerators and home appliances, Nord, is set to be sold to Czech investors, the Kyiv office of investment bank Galt & Taggart Research reported on Nov. 10, citing news sources.

According to the report, current majority owner Valentyn Landyk, a lawmaker in the Moscow-leaning Regions party, is reportedly close to a deal that would see unknown investors from the Czech Republic take control of the Donetsk-based company. The investors eyeing Nord, which owns three plants in Ukraine, one each in Russia and Jordan, were not identified in any of the reports cited by investment banks.

Appearing on television late last month, Regions leader and ex-premier Victor Yanukovych said the Nord company is one of many industrial groups in the country which is suffering from declining orders for its goods. Analysts said Nord is a Soviet-built factory which has suffered heavily due to competition – namely foreign imports.

According to a Sept. 4 report by investment bank Concorde Capital, Nord’s sales were expected to remain flat this year despite a consumer lending boom which has fueled record purchases of home appliances by Ukrainian consumers. The company posted $259 million in sales in 2007, but its sales decreased by 7.1 percent to nearly $112 million in the first half of this year.

The company posted a net loss of $5.5 million in the first half of 2008, compared to a net profit of $0.9 million during the same period a year ago. Nord’s sales increased by 17 percent in 2007 to $259 million, and net income stood at $2.65 million during this period, when the company sold more than 1 million refrigerators and freezers.

Horizon Capital closes $390 million private fund

Kyiv-based Horizon Capital, one of the region’s leading private equity fund managers, announced on Nov. 10 it had completed fundraising and closed its newest fund, Emerging Europe Growth Fund II, LP (EEGF II) with total capital commitments of $390 million.

The diverse group of investors in the new fund includes institutional investors, international financial institutions, family offices, and high-net-worth individuals, from the United States and Europe.

Horizon Capital said it initially targeted a fund size of $300 million, but EEGF II was oversubscribed within nine months, resulting in a larger fund size.

“The interest in emerging markets shown by both North American and European investors exceeded our original expectations and we believe the final size remains well within our investment strategy,” said Natalie Jaresko, Horizon Capital co-managing partner.

“We are confident that the market will present a robust number of investment opportunities at more reasonable valuations, given the current global economic crisis."

"We are very pleased that we have succeeded in maintaining key limited partners who participated in EEGF, such as The Church Pension Fund, Amanda Capital, C.V. Starr and FMO to EEGF II, while attracting new [partners]  such as Industriens Pension (Denmark), Alpha Associates (Switzerland), UTIMCO (USA), and the International Finance Corporation (IFC). Many of the institutional investors attracted to this fund are making their first investment in the region and we appreciate their confidence in our team, track record and strategy,” Jaresko added.

EEGF II will make investments in the range of $15 million to $40 million in expansion and buy-out opportunities in those companies of the Ukrainian, Moldovan and Belarus economies that can become leaders in their respective market segments based on significant competitive advantages. Sectors of primary interest include, but are not limited to, fast-moving consumer goods and services, financial institutions and industrial goods.

Horizon Capital, which manages some $600 million in total, was supported in the fundraising by UK-based Somerset Capital, an independent private market placement agent, established in 1999 and based in London.

In addition to the new fund, Horizon Capital manages two previous funds: Europe Growth Fund and Western NIS Enterprise Fund.

Gas trading billionaire buys  troubled Nadra Bank

Billionaire Dmytro Firtash, Gazprom’s partner in the supply of natural gas to Ukraine via Swiss-registered Rosukrenergo, has confirmed his Group DF holding has inked an agreement to purchase a majority stake in Nadra Bank.

Group DF, which manages Firtash’s diversified portfolio of interests in energy, real estate, and chemicals assets, said it agreed to purchase a stake in Nadra, which is considered Ukraine’s seventh-largest lender by assets but has suffered due to the global financial crisis.

The bank and its current owners, a grouping that includes top management, has neither confirmed nor denied the sale. The Kyiv offices of investment bank Galt & Taggart said a price tag has not been named, but predicted that the deal is expected to be completed in the next several weeks.

Ukrainian banks of this size have sold in recent years to leading European financial groups for $700 million to $2 billion. But Galt & Taggart said the acquisition was rumored to cost significantly less as the global financial crisis has depressed valuations.

With assets selling for so cheap during the financial turmoil and expected economic recession, cash-rich businessmen such as Firtash are expected to make lucrative long-term acquisitions.

Central bank: Kluyevs bought Prominvestbank

Officials at the National Bank of Ukraine announced on Nov. 11 that a 68 percent stake of Prominvestbank, Ukraine’s 6th largest bank by assets as of the first half of 2008, had been sold to a consortium of strategic investors led by businessmen and brothers, Andriy and Serhiy Kluyev.

The stake was sold by the bank’s chairman Volodymyr Matvienko, who along with relatives and employees owned the controlling stake in the bank, which suffered after a smear campaign triggered a run on deposits.

Officials said they would be required to restore the bank’s financial health, in part by injecting fresh funds to improve its liquidity position.

There are also plans to quintuple the bank’s share capital, which currently stands at $34 million, by the year-end, Dragon Capital said in its report. On Nov. 10, Prime Minister Yulia Tymoshenko warned that should the new investors fail to rescue the bank, the state would step in and take over the bank. The central bank bailed out Prominvestbank with a more than $600 million rescue package and instated state administration. The central bank also froze deposits at the bank.

According to a representative of the National Bank, its temporary administrator will appoint new management and supervisory boards at Prominvestbank within days and hand over the administrative control of the bank to the new management. Reportedly, the bank will be led by Ihor Frantskevich, ex-CEO of Aval bank, Ukraine’s second largest bank by assets, and Index Bank, controlled by Credit Agricole.

Kyiv-based Investment bank Dragon Capital said it viewed the arrival of new owners as a positive signal that should enhance customer confidence in the banking system. Importantly, the fast resolution of the bank’s problem has been a prerequisite for the International Monetary Fund’s $16.4 billion disbursement to Ukraine, Dragon Capital added.

A Nov. 4 report by the London-based Financial Times said two consortiums of investors had been in last minute bidding for a majority stake in Prominvestbank. One was composed of the local affiliates of Russia’s Alfa Group, Alfa Bank Ukraine, and banker Mykola Lagun, who co-owns Kyiv-based Delta Bank.

The report said the other consortium, which had already signed preliminary agreements on buying Prominvestbank, was led the Kluyev brothers. The two brothers also serve as lawmakers and are members of the Moscow-leaning Regions party led by ex-premier Victor Yanukovych. Central bank officials said the Kluyev brothers made the purchase through their SLAV AG holding.