Key issues in Ukraine’s economic sectors require optimal solutions, and delaying their resolution is not an option. The First Investment Forum, organized by the Ukrainian Bar Association (UBA) on June 6-7, will serve as a platform to discuss these solutions, explore promising investment opportunities, and tackle legal challenges critical to Ukraine’s sustainable development.

One of the most promising investment opportunities for Ukraine is the development of a stock market leveraging numerous state-owned assets. In his blog on LIGA.net, Mykola Stetsenko, UBA President and Managing Partner at AVELLUM, shares his thoughts on how to achieve this.

Ukraine is currently in a unique position, with the state holding significant stakes in various companies and operational assets (state enterprises). This level of state ownership in the Ukrainian economy hasn’t been seen since the early 1990s, during the transition from the Soviet Union to an independent Ukraine, when many industrial assets were inherited and later privatized.

Unlike in the 1990s, today’s state assets, spanning sectors like banking, energy, and telecommunications, are far better maintained and profitable. Notable examples include PrivatBank, Ukrnafta, Kyivstar, and the Ocean Plaza shopping mall—well-known and widely used by Ukrainian consumers. Recently, a new law, "On Amendments to Certain Legislative Acts of Ukraine Regarding the Improvement of Corporate Governance," was adopted, paving the way for better management of these assets in line with OECD best practices.

Ukraine’s past privatization efforts were highly mixed, with only a few success stories, such as Kryvorizhstal (now owned by ArcelorMittal). However, Ukraine’s current privatization laws are far more transparent, mandating open competitions and auctions on electronic platforms. As a result, there is a strong temptation to privatize all these enterprises by selling them to strategic foreign investors and international financial institutions.

However, it’s crucial not to miss this unique opportunity to maximize the benefits of these assets for Ukraine, particularly by implementing pension reform and revitalizing the country’s stock market. Numerous studies over the past decade have highlighted the urgent need for Ukraine to transition to a mixed system of mandatory pension contributions alongside voluntary private pension schemes. Last year, Ukraine’s Prime Minister reaffirmed the government’s commitment to this reform, stressing the need to simultaneously reform the stock market and capital markets.

For this reform to succeed, it must provide attractive investment opportunities for private pension funds. Poland’s successful introduction of a private pension system and subsequent stock market growth serve as a viable model.

Therefore, the Ukrainian government should consider launching initial public offerings (IPOs) for significant stakes in most state-owned enterprises. After a successful IPO, the government could sell large portions of these shares to strategic investors, while retaining blocking minority stakes or "golden shares" to protect against delisting or liquidation of these strategic privatized enterprises.

In my view, this approach would bring optimal benefits to Ukraine, including creating investment assets for private pension funds, generating liquid assets attractive to both local and foreign investors, and increasing the value of state-owned enterprises in the national budget.

Of course, such plans should be implemented after the war. But preparation must begin now. Key issues in Ukraine’s economy demand immediate solutions, and we cannot afford to delay. This week’s First Investment Forum, organized by the UBA, will address these issues, and I hope we will find answers to some of them.

However, building a model for a future competitive Ukraine is only possible through a full-fledged dialogue between key business associations, the legal community, and renowned macroeconomists. The government should initiate this dialogue, so the ball is now in their court.