Last week saw an official announcement that Dnipropetrovsk business tycoon Viktor Pinchuk had created the new London-based mega-company EastOne to look after his many diverse assets ahead of undertaking a possible IPO.
Analysts interpreted the launch of EastOne as part of a wider trend among Ukraine’s billionaires looking to consolidate their regional position while seeking higher international profiles for their business empires. Pinchuk is the second richest person in Ukraine with an estimated fortune of USD 7 billion according to Korrespondent magazine.
EastOne’s Chairman of the Board Gennadiy Gazin, former chairman of the Interpipe board of directors, will be responsible for day to day business at the new company. “Our aim is to create investment platforms which have long term potential,” Gazin said, adding that the firm hopes to develop its global presence and create strategic partnerships outside Ukraine. The company will also have offices in Kyiv and Pinchuk’s home town of Dnipropetrovsk.
Uniting Pinchuk’s diverse assets
EastOne’s portfolio currently contains a total of 20 businesses and projects with an estimated overall value of more than USD 10 billion. This new investment and consulting company comprises a diverse collection of assets and includes pipe and wheel construction enterprises, which fall under the Interpipe umbrella, plus media assets such as Ukrainian TV stations STB, ICTV and Novyi Kanal, print media interests including the newspaper Fakty and the Dniprospetzstal steel plant.
Gazin also announced that EastOne has plans to undertake a possible IPO at some point next spring involving the group’s pipline construction interests.
EastOne further unveiled plans to form a new media holding based on the group’s extensive Ukrainian media assets. “We have already received permission from the Ukrainian Antimonopoly Committee to go ahead with this concentration of our media interests,” Gazin confirmed.
All eyes will now be on future moves towards a major IPO. At the end of 2006 Pinchuk announced far-reaching plans to place his companies on the London Stock Exchange at some point during 2008 or 2009, and the creation of EastOne is being viewed as a necessary prerequisite along the road to a successful IPO.
Branching out from the Ukrainian
Over the next five years the company intends to diversify into a number of countries and decrease its focus on Ukraine from 90% of overall assets to around the 50% mark.
The portfolio strategy of EastOne will help facilitate investment internationally and build on existing projects in the US, Central Europe and the CIS in a range of spheres including information technology, real estate, finance and retail.
Company officials predict that the total volume of transactions will be approximately USD 3 billion in 2007.
Investment experts observed that the creation of EastOne should facilitate the further development of Pinchuk’s business empire. “The new company will function with a global business strategy and help diversify the branches of Pinchuk’s assets,” Millennium Capital’s Yuriy Oleksiyenko told Business Ukraine. He added that the creation EastOne is sure to help Pinchuk succeed in the more competitive international market.
Appealing to international investors
EastOne’s British registration is not only a question of prestige, but also a way of attracting foreign partners, according to market experts. “Establishing company headquarters in London is a convenient way to attract foreign investment,” said Ivan Kharchuk from Dragon Capital.
Much of the local news coverage of the EastOne launch played with the company’s catchy title, which is a translation of the name given to the legendary Vostok 1 craft used by Soviet cosmonaut Yuri Gagarin during his pioneering 1961 space flight.
Pinchuk’s plans may not have quite the same global implications, but they could prove pioneering and break new ground for Ukraine’s business leaders.
