UKRAINE: An Introduction to Corporate/M&A

The Ukrainian Wartime Economy and M&A

Ukraine continues to grapple with the challenges of Russia’s full-scale invasion, which not only disrupts the daily lives of its people but also shapes broader economic and market dynamics – particularly within the corporate and M&A landscape.

Despite the ongoing war, the Ukrainian economy displayed resilience in 2024, with GDP estimated to have grown at 2.9% by the EBRD and 3.5% by the IMF, recovering from a late-year slowdown. This growth was underpinned by strong defence-related spending, a rebound in agriculture and industry, and steady support from international partners.

The corporate and M&A sector showed signs of further stabilisation: although overall deal value declined by roughly 30% compared to 2023 – falling to an estimated USD1.2 to USD1.5 billion – the number of mid-sized transactions rose by over 20%, totalling 113 deals. Key sectors driving this activity included IT and technology, real estate, and agriculture, with notable highlights such as a USD200 million investment in Creatio and strategic acquisitions in telecoms. Foreign investors accounted for around 60% of the total deal value, according to Inventure.

Looking ahead to 2025, moderate economic growth of between 2.0% and 3.0%, according to the IMF, is forecast, supported by continued reconstruction, reform initiatives, and enhanced investment protections such as war-risk insurance. However, these projections remain highly sensitive to the security environment and the stability of foreign financial assistance.

The five most attractive sectors, from an M&A standpoint, of the Ukrainian economy for 2025 are:

1. technology/innovation;
2. agriculture/agri-food;
3. real estate and construction;
4. power and utilities/energy: and
5. defence/defence manufacturing.

The Ukrainian government and stakeholders have, in recent years, not only demonstrated effective crisis management but also introduced new tools and instruments to attract investment into Ukraine, while preserving the existing state incentives for investors.

Capital controls

The National Bank of Ukraine (NBU) has, since 24 February 2022, been operating foreign exchange/capital controls to stabilise Ukraine’s economy and to prevent damaging outflows of capital. Since then, the NBU has softened the limitations several times in response to market stabilisation. At the same time, the NBU has also “tightened the screws” where it had to in response to what it considered unproductive capital outflows. Considering the numerous revisions and updates introduced, it is clear that the NBU is steadily working toward easing capital controls while seeking to maintain a balanced and stable regulatory environment.

As of July 2025, the following cross-border payments are allowed, provided special conditions are met and/or within specified limits:

1. payment of loan interest;
2. repayment of loan principal; and
3. payment of dividends.

Notably, outbound investments by Ukrainian businesses remain largely restricted under existing capital control regulations placing structural limitations on foreign market M&A activity.

As mentioned above, capital controls are being constantly reviewed and revised; staying up to date on the applicable rules is advisable.

War-risk insurance programmes

In 2024-2025 several war-risk insurance programmes became available in Ukraine.

Those include the following:

1. EBRD‑Aon Guarantee Facility (URGF) – Launched with a EUR110 million reinsurance guarantee, enabling local insurers (eg, INGO, Colonnade, UNIQA) to cover inland cargo, vehicles, and rail stock, backed by reinsurers like MS Amlin. Early uptake has already exceeded EUR5 million in coverage, according to EBRD.
2. McGill & Partners/FortuneGuard (via Ukrainian insurer ARX) – First commercial property (commercial properties, renewables, agri‑food, logistics, etc) war‑risk reinsurance programme since 2022, offering up to USD50 million per policy for properties situated more than 100 km from frontlines. This private initiative supports investor confidence by protecting key assets.
3. DFC-Aon-ARX collaboration – DFC launched a USD50 million reinsurance facility brokered by Aon and distributed by ARX, to build a portfolio of war risk, including damage from missile attacks, drone attacks and their debris, insurance policies for companies operating in Ukraine (a USD2.5 million limit per policy applies).
4. Multilateral Investment Guarantee Agency, World Bank Group (MIGA) – Funded through the Support for Ukraine Reconstruction and Economy Trust Fund (SURE TF) and MIGA’s own capacity, it has issued over USD215 million in guarantees for projects in Ukraine since February 2022.

State investment incentives

The state investment incentives launched before 24 February 2022 remain in force, subject to some limitations specific to wartime.

Those include the following:

1. Diia City – A “virtual free economic zone” regime for tech companies with benefits guaranteed to last for 25 years. Inside Diia City a number of well-known investment tools familiar to Westerners are available (convertible loans, liquidation preference, options and employee stock option plans, warranties and indemnities, liquidated damages, etc).
2. Industrial parks – Special industrial territories (usually with all the necessary infrastructure and services already in place), which enjoy simplified regulatory procedures and a package of investment incentives (including VAT and import duty exemptions). Their use is available only to specified types of businesses.
3. Significant investment projects – Investment projects above EUR12 million may benefit from specified forms of state support (eg, exemption from VAT or import duty, reduced land taxes, etc) amounting to up to 30% of the planned amount of investment.

Legislative updates

Among the key legislative updates aimed at stimulating private capital inflows is the adoption of the Law of Ukraine “On Public-Private Partnership” scheduled to take effect on 31 October 2025. The draft law improves the public-private partnership (PPP) mechanism in Ukraine to attract the investment needed to accelerate the restoration of war-damaged infrastructure, and the construction of new facilities related to the post-war reconstruction of Ukraine’s economy. Key provisions of the draft law include:

1. the standardisation of PPP formats (concession, PPP agreement, etc);
2. the expansion of scope of projects (eg, housing, transport and social infrastructure);
3. enabling donor grants as co-financing;
4. the simplification of procedures for small-scale projects; and
5. the introduction of a unified procurement form.

Enhanced protection of investment

Normally, title to participatory interest (ie, equity interest) in an a limited liability company (the most popular business vehicle in Ukraine) is recorded with the Unified Sate Register (the Ukrainian corporate register). Now, participants in an LLC may transfer the record-keeping of such title to the special system of the National Depository of Ukraine. This system, operating as the system of securities accounts,

1. provides an additional layer of security to safeguard ownership rights to a participatory interest;
2. enables efficient use of the pledge of participatory interest as a transaction instrument;
3. enables investors to employ escrow-account instruments in their transactions; and
4. may be used by participants to exercise their shareholding rights online (eg, holding of general meeting, dividends payment).

Emerging sectors: defencetech

In response to the Russia’s full-scale invasion, Ukraine’s "defencetech" sector has rapidly evolved into a vital and promising area for investment. The urgent need for innovative military solutions has driven significant growth, attracting both state support and international interest. As a result, defencetech is gradually becoming a key driver of Ukraine’s wartime resilience and a likely cornerstone of its post-war economic renewal.

Ukraine’s defencetech sector surged in 2024, witnessing 20 VC/PE deals and raising USD59 million, which represented 13% of overall tech investment in Ukraine. It is projected to exceed USD100 million in 2025.

Reportedly, the Ukrainian market is among the fastest growing producers of unmanned aerial vehicles (commonly known as “drones”) globally: 1.5 million first-person view drones were produced in 2024, with a goal of 4.5 million by the end of 2025.

Other fast-growing segments include electronic warfare, robotics, military AI and cybersecurity, with significant investor interest in dual-use technology.

A number of leading start-ups (Bavovna.AI, Swarmer and Osavul) have each raised around USD2.7M in 2024.) In addition, Brave1, Ukraine’s state-led defencetech cluster, granted over USD40 million to start-ups and supports an ecosystem of over 300 companies.