1

Privatization 2016 - Opportunities for InvestorsMarch 2016

Igor BilousChairman of the State Property Fund of Ukraine

2

• WE UNDERSTAND: PRIVATE OWNER IS MORE EFFECTIVE THAN STATE.

• WE MAKE ALL PROCEDURES AS SIMPLE AS POSSIBLE.

• FULL TRANSPARENCY, NO REGULATIONS, NO RESTRICTIONS.

IMPORTANCE OF PRIVATIZATION

1

2

3

3

OUR PRIVATIZATION PRINCIPLES

• TRANSPARENCY OF PROCEDURES• Transparent procedure from announcement to auction;• No specific constrains to participate.

• COMPLIANCE WITH NATIONAL LEGISLATION• Clear regulation exceptions for process;• Investment obligation taken by investor;• Funds origination.

• RISK MITIGATION• Information disclosure• Access to assets and mitigation• Clear sale & purchase agreement

1

2

3

4

PRIVATIZATION PROCEDURE (approx. 8 months)

Decision on SOE Privatization

(CMU act)

1

Tender Committee (TC) formation to prepare

requirements for qualified investors

SOE inventory, independent audit

& valuation

CMU act approves TC propositions

TC approves the announcement date

and the auction date

Announcement publication in

the SPFU Bulletin

Auction Day & Winner Selection

Closing Period (agreement &

AMC approval)

2 3 54

TC meetings to define starting price &

fixed requirements.

Approval by International Working Group

76 98

≈ 1 month ≈ 3 months ≈ 1 months ≈ 5 days ≈ 2 months

≈ 2 weeks ≈ 1 week ≈ 1 week 30-45 after announcement

5

ABOUT

450 ASSETES,

including:

Big Enterprises 20

50

380

Medium Enterprises

Small Equities & Units

number of assets (units)

FOR PRIVATIZATION IN 2016

6

“Odesa Portside Plant” Privatization

Advisory Group:

OPP – the leading CEE nitrogen fertilizer producer

Assistance:

Key Workstreams:•Lead Advisor •Valuation & Modeling•Communication with bidders

•Legal VDR & VDD•Input in Terms & Conditions of Privatization•Assistance in DD

•Financial and Tax DD•Preparation of Virtual Data Room•Preparation of Reports

•Coordination of work with OPP on the ground•Assistance in analysis and marketing

Partners to Winner:

•Financial Assistance for Privatization on International Standards

•Possible financial cooperation for the plant development (with the buyer of OPP)

7

“Energy DISCOs” Privatization

Kharkivoblenergo Mykolayivoblenergo

Zaporizhyaoblenergo Termopiloblenergo

Cherkasyoblenergo Khmelnitskoblenergo

Regional Energy Distribution Companies with controlling state stake (51-100%)

Advisor:

Assistance:

Key Workstreams:•Pre-privatization advice •Review of Contracts and Obligations•VDD and Data Room•Energy Privatization Communication Strategy•Financial & Legal Privatization Advisory

•Financial Assistance for Privatization on International Standards

8

“Tsentrenergo” Privatization

Advisory Group:

Produce about 10% of electricity in Ukraine

Assistance:

Key Workstreams:•Lead Advisor •Valuation & Modeling•Communication with bidders

•Legal VDR & VDD•Input in Terms & Conditions of Privatization•Assistance in DD

•Financial and Tax DD•Preparation of Virtual Data Room•Preparation of Reports

Partners to Winner:

•Financial Assistance for Privatization on International Standards

•Possible financial cooperation

TBD

TBD

TBD

TBD

9

WHO CAN PARTICIPATE IN PRIVATIZATION

FOREIGN LEGAL ENTITIES AND INDIVIDUALS ARE WELCOMED TO THE PROCESS OF PRIVATIZATION

EXCEPT:- State business entities or their subsidiaries of any legal form- Persons incorporated in off-shore zones or listed in FATF list- Legal entities or individuals on any sanction list - Companies that are controlled by the persons specified- Ukrainian entities with 25%+ state-owned stake

12345

10

STEPS TO BUY THE STATE-OWNED ENTERPRISE

• APLICATION PROCESS- due-diligence - visit the unit and meet management teem- make security deposit

• PARTICIPATE IN AUCTION- verification of compliance - propose the best price in auction- win the auction

• AGREEMENT & PAYMENT- signing the contract for sale- permission from Antimonopoly Committee - payment

1

2

3

11

Thank you for your attention!

Contact details:

igor.bilous@spfu.gov.ua +38 (044) 200-33-93