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Ukraine Urges Companies to Divest from Russia and Invest in Ukraine
Russian Government Seizes Foreign Companies' Assets
Ukraine is calling on global companies to divest from Russia and instead invest in Ukraine, as Moscow continues to seize the assets of foreign companies. In a recent move, Russian President Vladimir Putin signed a decree to take control of the Russian subsidiaries of French food producer Danone and Danish brewer Carlsberg. This is the first time that Russia has taken hold of the subsidiaries of Western companies since it seized Finnish and German energy companies Fortum and Uniper in April. In response to this, Ukraine is reaching out to the approximately 200 global companies that have stopped investing in Russia to offer them the opportunity to build manufacturing facilities in Ukraine instead.
CEO of UkraineInvest Calls for Withdrawal from Russia
The CEO of UkraineInvest, Sergiy Tsivkach, is urging more companies with operations in Russia to pull out. He is encouraging CEOs to consider not just the ethical implications but also the business case for fully divesting from Russia. Tsivkach emphasizes the importance of showing that the aggressor, Russia, cannot receive any investments or operations from international companies. Over 1,000 companies have already announced that they are curtailing operations in Russia due to the country's illegal invasion of Ukraine, but there are still some companies that continue to operate undeterred. Tsivkach believes that companies need to understand that Russia is not a reliable business partner.
Uncertainty for Carlsberg and Danone
Carlsberg and Danone are among the companies affected by Russia's recent asset seizures. Carlsberg announced in March 2022 that it would seek a full disposal of its business in Russia and signed an agreement in June 2023 to sell its subsidiary. However, due to Russia's actions, the prospects for the sale process are now highly uncertain. Danone is also investigating the situation, as it had already started transferring control of its business in Russia to a Russian entity in October of the previous year. Both companies are preparing to take all necessary measures to protect their rights as shareholders and ensure the continuity of their operations in the interest of all stakeholders.
The Business Case for Investing in Ukraine
Despite the ongoing war in Ukraine, the country is actively seeking investment for its recovery and reconstruction. At the Ukraine Recovery Conference in London in June, Ukraine's allies pledged nearly $60 billion toward these efforts. UkraineInvest is currently overseeing 17 investment projects worth over $2.3 billion. However, due to the unpredictability associated with retaining operations in Russia, it may take decades before companies see enough of a business case to consider returning to the country. Therefore, NATO's support and long-term guarantees are crucial for attracting private sector investments in Ukraine.
The Impact on New Businesses
The Shift in Investment Focus
The escalating tensions between Russia and Ukraine have prompted Ukraine to urge companies to divest from Russia and invest in Ukraine instead. This call emphasizes the risks associated with operating in Russia, as the Russian government continues to seize the assets of foreign companies. For new businesses considering international expansion, this geopolitical situation presents a unique opportunity to evaluate their investment decisions strategically.
Ethics and Business Considerations
The CEO of UkraineInvest, Sergiy Tsivkach, has underlined the importance of considering not just the ethical implications but also the solid business case for withdrawing from Russia. This message resonates with companies that prioritize stable and reliable business environments. Investing in a country like Ukraine, which is actively seeking recovery and reconstruction funds, aligns with businesses' long-term interests in supporting a stable economy.
Uncertainty and Risk Mitigation
Carlsberg and Danone serve as cautionary examples of the uncertainty faced by companies operating in Russia. The recent asset seizures by the Russian government have jeopardized their operations, sales, and potential divestment plans. New businesses must carefully assess the risks associated with maintaining operations in Russia and consider diversifying their investments to mitigate such risks.
Ukraine's Investment Potential
Despite the ongoing war in Ukraine, the country is actively seeking investment for its recovery and reconstruction. The substantial commitments made by Ukraine's allies at the Ukraine Recovery Conference demonstrate the international support for Ukraine's economic growth. New businesses considering expansion can explore the opportunities offered by UkraineInvest's active management of investment projects worth billions of dollars.
Conclusion: A Strategic Move
In light of Russia's aggressive approach and the unpredictability it brings to the business landscape, new businesses should carefully evaluate the potential risks and benefits of investing in Russia. Divesting from Russia in favor of investing in Ukraine not only aligns with ethical considerations but also offers the prospect of stable long-term partnerships. By strategically assessing the geopolitical situation and the business environment, new businesses have the opportunity to make informed decisions that mitigate risk and support their growth objectives.
Article First Published at: https://www.cnbc.com/2023/07/19/ukraine-seeks-to-lure-global-firms-from-moscow-as-danone-and-carlsberg-assets-seized.html
