Currency control regulations from NBU complicate international deals and impede M&A in Ukraine

Currency control enforced by the National Bank of Ukraine (NBU) has been identified as a significant obstacle to international transactions and merger and acquisition (M&A) activities within the country. Participants in the M&A panel of the second Ukrainian PE & VC Summit in Warsaw highlighted the challenges faced by Ukraine’s M&A market, pinpointing currency control as a key factor disrupting capital flow and impeding cross-border deals. According to reports from Ukrainian media, Umgi investment company, part of the SCM Group, emphasized the detrimental impact of currency control on the M&A landscape in Ukraine, citing Nadezhda Kaznacheyeva, Umgi’s Chief Investment Officer, as a speaker at the event.

Kaznacheyeva remarked on the complexities of conducting international deals and closing transactions in hryvnia, the Ukrainian currency. The average timeline for finalizing a deal has prolonged from one year to two or even three years as a result of the regulatory constraints imposed by currency control. Although there is notable activity in the domestic M&A market, the process of securing deals remains arduous due to restrictions on capital movement. Kaznacheyeva highlighted the ongoing challenges faced by Ukrainian companies regarding financing and executing transactions, underscoring the cautious approach adopted by strategic investors who seek stability and predictability before engaging in significant deals.

Looking ahead to 2025, Kaznacheyeva outlined the anticipated trends in various sectors of the Ukrainian economy. The agricultural industry, IT, energy, logistics, and infrastructure are poised for increased activity, with potential growth in miltech. Industrial minerals are identified as a crucial asset for the country’s economic recovery and development. Despite the prevailing obstacles, there is a gradual resurgence in the market, indicating signs of revival and resilience within the Ukrainian M&A landscape.

Established in 2006 by SCM Group, Umgi is an investment firm specializing in the advancement of businesses in the raw materials and processing sectors. The company’s investment strategy centers on mineral extraction, by-products management, waste processing, and industrial goods and services production. The combined value of Umgi’s portfolio companies exceeds $500 million, reflecting the firm’s commitment to fostering growth and innovation within the Ukrainian business environment.