Avellum Managing Partner Mykola Stetsenko talks about M&A in Ukraine in 2025.
CEELM: What would be your bet at the start of 2025 – will we see more, fewer, or the same level of M&A activity in Ukraine?
Stetsenko: Definitely more activity. Even last year, we saw a significant amount of work coming into the Ukrainian market, and that momentum is set to continue. Local M&A has proven to be incredibly resilient, and we’re seeing continued investment across various sectors, including niche and adjacent industries. Additionally, there’s hope that some form of ceasefire or settlement will take place this year, which could initially drive opportunistic investments. Once stability sets in, we expect a wave of foreign investments, leading to increased deal activity. We also anticipate growth in sectors that weren’t historically as attractive – defense being a key example. Logistics is another area that is rapidly evolving, given Ukraine’s position as a key transit hub on the EU’s eastern border. The demand for enhanced logistical infrastructure is a major talking point among our clients, and we expect this to drive significant M&A activity.
CEELM: What do you believe will be the main factors influencing the M&A pipeline throughout 2025?
Stetsenko: The war remains the number one factor shaping everything. The biggest game-changer would be a ceasefire, and there are already rumors that something could happen by Easter, possibly even leading to a more structured peace deal later in the year. While a full peace agreement is less certain, even a sustained ceasefire would provide enough stability to unlock M&A opportunities. Beyond that, macroeconomic conditions, investor sentiment, and regulatory developments will all play a role in determining how many deals actually close by year-end.
CEELM: Are there any upcoming legislative changes that could impact the M&A market in 2025?
Stetsenko: Yes, quite a few. Ukraine is actively harmonizing its legal and regulatory framework with EU standards, so we expect substantial changes across various areas, including the regulation of goods, services, and corporate governance. One critical area to watch is capital control legislation. If a ceasefire is reached, we anticipate some relaxation of capital controls, which would boost investor confidence and make it easier for foreign capital to flow into Ukraine.
CEELM: Who do you expect to be the main buyers in Ukraine in 2025?
Stetsenko: We’re likely to see a mix of different investor types. Historically, after economic downturns or major geopolitical shifts, the first buyers tend to be non-strategic investors – those looking for undervalued assets and quick returns. This could include some venture capital or private equity companies, though not necessarily the traditional ones. Strategic investors will follow, but likely toward the latter part of the year once there’s more stability.
IFIs are already deeply invested in Ukraine and remain the country’s largest private capital providers. While they’ve primarily been lenders up to this point, we could see them shift toward equity investments. Additionally, privatization could create opportunities – many state-owned enterprises that were slated for sale before the war had their transactions put on hold, but a more stable environment could revive those deals.
CEELM: What will be the most attractive M&A targets in Ukraine in 2025, and why?
Stetsenko: State-owned enterprises will be among the key targets. The Ukrainian government has significantly increased its presence in certain industries, in some cases to an unsustainable level – such as banking, where the state now controls around 60% of the market. Once the war ends, privatization will be inevitable.
One major player to watch is Ukrnafta, the national oil company. Historically, Ukraine already had Naftogaz as a dominant force in the gas sector, but recent restructuring efforts could make privatization a viable path. Ideally, Ukraine would pursue a structured IPO rather than selling a 100% stake to a single foreign buyer. For example, it would be concerning if Ukrnafta were to become a full subsidiary of BP or another major international player.
Beyond state-owned enterprises, agriculture will continue to be a highly attractive sector. It has long been a cornerstone of Ukraine’s economy, but there’s still significant room for efficiency improvements. Even modest gains in productivity could translate into substantial profits.
Construction is another area to watch. The sector is already active, but many foreign investors looking to participate in reconstruction efforts – such as rebuilding schools, bridges, and other infrastructure – may find it easier to acquire existing companies or enter joint ventures rather than starting from scratch. I believe such companies will be attractive targets for 2025.
This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
