Ukraine's government selects KPMG for large privatisation project

28 October 2020 Consultancy.eu

Ukraine’s government has selected KPMG to serve as the lead advisor for the privatisation and sale of the JSC First Kyiv Machine Building Plant, one of Eastern Europe’s larger manufacturing plants of large-tonnage equipment. 

The Big Four firm fended off several rivals that participated in the tender process, with KPMG coming out on top for its track record in strategic privatisation and deal advisory projects. The tender was announced in August, the outcome last week, and KPMG has commenced its work on a project which is expected to run for months. 

JSC First Kyiv Machine Building Plant was founded in 1883 and today is one of the leading machine building enterprises in the country and region. Among the products it manufactures are equipment for the chemical, rubber, construction, heavy industry and space sectors. The plant also repairs equipment and spare parts for players in the oil, gas, automotive, mining and metallurgy industries.

JSC First Kyiv Machine Building Plant

According to media reports in Ukraine, it won’t be easy to find a private investor for the plant and its circa 300 employees, given its size and national importance, which means that its operations are carefully watched by politicians and media.

The sale is part of a much broader privatisation strategy by the Ukrainian government. In March this year, just before the Covid-19 outbreak, the Cabinet of Ministers approved a decision to privatise 435 state-owned objects, including four large enterprises. Alongside the JSC State Food and Grain Corporation, SJSC Khlib of Ukraine and SE Artemsil, JSC First Kyiv Machine Building Plant is one of these four mammoths.

Proceeds from privatisation are expected to hit UAH 3 billion by the end of the year, and for 2021, the government’s privatisation fund is aiming to realise proceeds of UAH 12 billion.

The privatisation plans are a major departure from previous national policy – between 2008 to 2018, only 93 objects were transferred to private hands. However, “under new owners the enterprises, which generated problems and losses for years, will be run more efficiently,” said Oleksiy Honcharuk, who served as Prime Minister until March this year.