The number of incoming foreign investments in industrial parks (IPs) of Ukraine has significantly decreased, and now the interest of foreign participants has reduced to single requests (no more than 10 per year), said CEO of the group of companies “Industrial Parks of Ukraine” Valery Kyrylko.
“That is, even before the full-scale war, there were not many of them, but there were four working private enterprises and seven residents, three of them with foreign capital, while now there are 15 working parks, about 30 residents, and there are no foreign ones at all. All foreigners who are interested in investing in parks are no more than 10% of the investment structure of private sector residents,” Kyrylko told the Interfax-Ukraine agency.
He reminded that the three residents with foreign capital, which were in the IP before the war, are the Evrocar plant in Transcarpathia, which was completed in 2018; the factory for the production of Plank Electrotechnic sockets, which was launched in 2020 by the private enterprise “Bila Tserkva”, as well as the factory for the production of HEAD Group skis, which currently froze this project at the private enterprise “Winter Sport” in Vinnytsia.
“There are many reasons for the absence of foreign investors: war, lack of mass practice of insurance against war risks, disruption of logistics chains, local corruption, weak legal and legislative protection of foreign investments, etc. Although the global practice of private equity development is aimed more at attracting foreign investors and participants,” Kyrylko explained.
According to him, the foreigners who now show the greatest interest in IP and monitor the market are manufacturers of construction materials.
“For example, Turkish and Austrian companies – manufacturers of reinforced concrete structures or metal frames – are really interested. The same Koreans recently came to the IP in Buchi, submitted two requests for a ZBK and sandwich panel plant. “Foreigners understand in advance that they still need to build factories, and this is beneficial to them, because sooner or later Ukraine will be restored, and they will already have building materials and factories by that time,” Kyrylko said.
He also reminded that there is already the first example of insurance against war risks – the Multilateral Investment Guarantee Agency of the World Bank (MIGA) insured the M10 Lviv Industrial Park project for $9.2 million.
Speaking about the issue of the structure of Ukrainian investors in private equity, Kyrylko noted that these investments have a double-concept character: the first is a classic investor who invests in real estate development and then receives income from it in the form of rent or sale; the second – when an enterprise entering the park becomes an investor and builds its plant at its own expense.
“In the presence of a confirmed IP participant, it is not a problem at all to find investments for the construction of facilities, for example from international funds. The American investment fund Chicago Atlantic Trident, represented in Ukraine by Serhiy Tsivkach, is ready to invest from $5 million to $50 million per object,” says Kyrylko.
At the same time, he reminds, the state allocated funds (1 billion hryvnias in 2024) to the participants of industrial parks to connect to energy networks, because such costs are large and irreversible.
“On average, for a 30-hectare park, you need to spend up to 100-120 million hryvnias on the network, if the park is somewhere in the field, that’s why the state is connected here,” the expert comments.
In addition, he says, the volumes of Ukrainian private investments have increased, as many other opportunities for investing funds, in particular in real estate, have closed.
“And industrial real estate, although low-income, is stable, because if a factory comes in and invests EUR 1.5 thousand per square meter in equipment. m, then it remains for 5-10-15 years. That is, stability is a plus. The only minus is the profitability, but it is also acceptable, because it is the lowest in terms of payback period in Europe, where it starts from 12 years, and in our country it is 8-10”, – says the expert.
He also cites the possibility of buying prefabricated plants from European manufacturers as examples for investing in construction.
“The very new Astron plant in Slovakia for the production of prefab plants has joined the Slovak export program, that is, by buying a prefab plant of European quality from them, you can get a loan from Slovakia at 2-3% per annum in euros. Therefore, if there is a confirmed resident in the private enterprise, finding investment in construction is not a problem at all, no matter who says otherwise,” Kyrylko believes.
As reported, currently 86 parks have been entered into the Register of Industrial (Industrial) Parks of Ukraine, including 18 this year.
Not a single park is registered in Kharkiv, Kherson, Zaporizhzhya, Kirovohrad and Mykolaiv regions, and the largest number of them (15) is registered in Lviv region.
The group of companies “Industrial Parks of Ukraine” has been developing concepts and registering IPs for five years, currently the company is working on the 44th concept, with its help 20 IPs have been registered.
