While the year of the pandemic and quarantines has significantly affected business processes worldwide, our strategic plans remain unchanged. As a domestic investor, we believe in our country, understand further development plans, and keep investing. Today, UMG Investments has portfolio companies in three industries: mining, by-product and waste management, and industrial goods and services. In 2021, we plan to expand these areas and add new investment opportunities.
“In short, it is possible to describe 2020 as a test of strength. And our team passed it 100%! We have made significant progress in every portfolio. Clay mining assets were expanded through the acquisition of shares in the Chasiv Yar Refractory Plant. In the processing portfolio, we have the launch of a new company—Ukrainian Mineral Fertilizers—and the agreement to start new construction. Seaport logistics has been added to the logistics direction of the portfolio of industrial goods and services,” UMG Investments CEO Andriy Gorokhov commented on the results of the year. “In total, the team has four M&A agreements behind its back and the launch of two new productions built from scratch. Such a result for the year is possible only with a long-term strategy and quality risk management.”
The mining portfolio is represented by the VESCO group of companies and the NTRU (Novotroitsky Mining Administration).
The VESCO group of companies, which is one of the leading producers and exporters of clay, consists of VESCO JSC, Druzhkivka Mining Administration, PJSC Ogneupornerud PJSC, and Chasiv Yar Refractory Plant. In 2020, the group sold 2.4 million tons of clay. About 84% of VESCO clay was sold in export markets across 18 countries. Ceramic tile manufacturers in Spain were the largest consumers of clay with a share in sales of 26%. The company received UAH 3 600 million in revenue. In 2020, transfers of taxes and fees to the budgets of various levels amounted to UAH 400 million. Social investments in the development of the regions were maintained at the pre-quarantine level and amounted to UAH 2.8 million.
Novotroitsky Mining Administration is one of the largest producers of limestone in Ukraine with a production volume of 4 million tons per year. In 2020, the NTRU shipped 4.1 million tons of products and received UAH 1 044 million in revenue. The company spent more than UAH 15 million on the purchase of new equipment to improve working conditions and increase the safety of manufacturing procedures. UAH 292.6 million was transferred to local and national budgets.
The portfolio of by-products and waste management is presented by Recycling Solutions, which is a comprehensive operator for the management of secondary resources for the coal, coke, iron and steel, and heat industries of Ukraine. In 2020, Recycling Solutions sold more than 2.3 million tons and 1.45 million cubic meters of man-made waste and by-products of domestic industrial enterprises across 24 countries. The company received UAH 1,100 million in revenue and invested UAH 53 million in the creation of new processing plants. The sale of industrial waste and by-products brought taxes in the amount of UAH 71.9 million to the national budget. Also, last year was marked by the expansion of its own production capacity—a new plant for processing a by-product of the coke industry was opened in Kryvyi Rih.
The portfolio of industrial goods and services is represented by INTECH, which operates in the field of production of industrial goods and services, railway logistics and offers commercial expertise of business projects in various sectors of the industry. In 2020, the net profit of INTECH combined with its managed assets amounted to UAH 2 614 million. The company added a total of UAH 261.83 million in taxes to the national budget of Ukraine. About UAH 77.4 million was invested in the renovation and expansion of production facilities. The volume of deliveries of products for metallurgy amounted to 78,100 tons, showing an increase of 79% compared to 2019. The logistics direction recorded the transportation of more than 3.3 million tons of cargo, which is 22% higher than last year. Seaport logistics was also added to this area, and Portinvest, which has been working in this field since 2010, came under the management of INTECH.
In 2020, UMG Investments paid considerable attention to the fight against the pandemic, the establishment of telecommuting for office workers, epidemiological audit and appropriate protection of production staff, and assistance to medical institutions in the regions where our companies operate. In total, the costs of the investment company and portfolio assets to combat the pandemic amounted to approximately UAH 9 million.
In February 2021, UMG Investments signed a Memorandum with the UAE state investment fund Mubadala. In accordance with the signed Memorandum, the parties confirmed the availability of opportunities for cooperation in the selection, analysis, development and implementation of mutually beneficial investment projects in Ukraine and abroad.
“In Ukraine, there are attractive investment projects and industries that need private funds. In addition to financing and expertise at the strategic level, the presence of a private equity fund among shareholders in the company is a powerful reputation factor. After all, it is a guarantee that due diligence of the business was successfully passed and there are prospects for future growth,” Andriy Gorokhov said. “So we are not only investors, but also a guide for foreign investment in the country. Dozens of projects are analyzed annually by the investment team. One out of ten moves on to the execution of an agreement stage. We have sufficient liquidity and are ready to invest more than $40 million in new projects annually. But it is obvious that at the same time, our partners and investors, and the company itself should work to make the value of cooperation with PE funds more clear and obvious for Ukrainian businesses.”
UMG Investments Corporate Communications Central Office
Reference information: UMG INVESTMENTS is an investment company specializing in the development of portfolio businesses with high growth potential. UMG Investments was founded by SCM in 2006 as a holding company of United Minerals Group, to manage assets in the commodity industries. Since its establishment, UMG Investments has expanded its range of activities and changed its business model from a management company to an investment one. UMG Investments representatives are members of the supervisory boards of portfolio companies, which allows them to influence the strategy and operational solutions through corporate management mechanisms. Today, UMG Investments has portfolio companies in three industries: mineral extraction, by-product and production waste management, and industrial goods and services.