Alexander Borodkin, Partner at Vasil Kisil & Partners in Ukraine, is asked what lawyers are talking about in his country at the moment. "I would say they’re talking about new investments,” Borodkin answers.
Indeed, Borodkin says, “starting from October or November of last year we feel there’s a little more activity in the legal market. Slowly things are picking up. The driving reasons could be a certain kind of stability over the last few years. We’ve reduced inflation, and there’s some stability in the East. This environment is giving business people some predictability, which is good for the market, not only in the form of restructurings and asset sales — things lawyers have been doing over the past few years to stay busy — but now actually in the form of investments. Businessmen are picking up the money from under their mattresses, and placing it in undervalued assets.” As a result, Borodkin says with a smile, “those who know the market — or who think they know the market better than others — they’re buying and investing.”
Borodkin reports seeing an uptick in activity from Israeli investors. "Normally it would be the Russians, of course, but now not so much, as one by one Russian investors and business are withdrawing from the country.” He says Turkish and Polish investors are exploring opportunities as well, though no big deals have closed yet. Borodkin says, “maybe in 2-3 years we’ll see the rest of Europe, and the Arabs. Maybe in 5-10 years even the US or China."
"I would mention two sectors as particularly active,” he says. “above and beyond agriculture, which has stayed strong over previous years.” The first Borodkin mentions is real estate: "mostly residential real estate — social class (cheap apartment buildings).” He says there are no free land plots in the market, "so investors are forced to take commercial land, rezone it, get all the permits. So it’s difficult to do it. But they're doing it.”
The second active market at the moment is energy, Borodkin reports particularly in the form of renewables. "Even though we’ve lost Crimea, which is great for renewables, the Kherson region next door is also very good.” Unlike many of its western neighbors the Ukrainian government hasn’t yet pulled back from its incentives, he says, so both wind and solar projects are growing.
Turning to the ongoing reform of Ukrainian legislation, Borodkin emphasizes the positive. “legislation is urrently being reformed in many areas, particularly in the judiciary system, of course. Is it working? It depends on what you compare it to. I had a case in Hungary recently where it took me a year to get a letter of enforcement, but even in ‘corrupt’ Ukraine you can get that in a month or two.” Still, he says, “but of course it could be better.” In any event, Borodkin notes, the question is less about the need for legislative reform than it is about the effectiveness of efforts to implement that reform. "The law is always changing,” he smiles. "It’s not that difficult to change the law. But it can be difficult to implement those changes. Like with Court reform. We have the laws — but changing the institution itself is the great challenge."
