You're reading: Warsaw-listed companies join forces to improve Ukraine’s image

A union of Ukrainian companies listed abroad is seeking to revamp the nation's tattered image and improve the level of investor relations. This, the companies hope, will help create a communication-friendly culture in Ukraine and instill long-term thinking among the nation's firms.

Some of
Ukraine’s top Warsaw-listed companies have joined together to set up the
Ukrainian Issuer’s Club. Created as a result of a cooperation agreement signed
in February this year by the Polish-Ukrainian Chamber of Commerce and the
Warsaw Stock Exchange, the organization will seek to improve the quality of
investor relations and burnish the country’s image among Polish investors.

The club,
which held its inaugural meeting on August 21 in Kyiv, comprises popularly
traded Ukrainian companies Astarta, IMC, KDM Shipping, KSG Agro and Milkiland.
All are listed on the WSE’s main trading floor, as well as Agroliga from the
alternative market NewConnect.

The image
of Ukrainian companies has been bruised in recent months. Failures to meet
unrealistic targets and late filings tested investors’ nerves. These were
further rattled by a qualified auditor’s report for agribusiness company
Agroton, who could not account for $66 million of revenue.

Polish
business daily Parkiet blamed irresponsible management and poor communications
for the negative sentiment towards Ukrainian companies, whose index on the
Warsaw market dropped 20 percent in May.

“Investors
have become disillusioned by the behavior of Ukrainian companies, and will be
wary of any new offers from the region,” the newspaper then wrote, adding that
problems with individual companies were spilling over onto investor perceptions
of the region as a whole.

That is
precisely what the new club’s founders want to avoid.

“The point
is to give an example [to companies with poor communication track records],”
said Beata Jarosz, board member of the WSE. While the club is mainly focused on
post-IPO companies, she said potential candidates will also have a chance to
cooperate, so as to learn the best practices for their more experienced peers.

So far, the
situation has been far from perfect.

“To say
that investor relations work in Ukraine is being carried properly would be
incorrect. Of course there are companies that do this properly, but there are
also ones that don’t and their actions impact everybody,” said investment
holding Pro Capital Group head Dmytro Oliynyk.

The idea of
common responsibility was also confirmed by Sergey Kasyanov, chairman of the
board of KSG Agro, who praised the project.

“We all want the companies listed on the exchange to be successful.
Because any failure of any company immediately impacts the others. We are all
in the same boat. And so this is a very good initiative, in which we will be
happy to participate very actively,” he said.

Oleg
Dubish, deputy head of the Polish-Ukrainian Chamber of Commerce, added that the
group would seek to influence the actions of underperformers in communications,
so as to raise the general level among Ukrainian issuers.

While this
is the number one priority, the club could also later engage in lobbying
activities and push for pro-business reforms, Dubish noted.

Ukrainians
citizens trying to invest abroad run into a number of hurdles, like the
requirement of individual permits to open foreign bank accounts. Institutional
investors are also limited by legislation, notably the lack of pension reform.