Ukraine cancels major privatization deal as international investor faces sudden disqualification
Kyiv, Ukraine (CNN) — Just days before the global Ukraine Recovery Conference in Rome, a high-profile privatization deal that had been hailed as a success story for Ukraine’s economic reforms has come to an abrupt halt.
On June 18, international investment group GIG Holding, through its local subsidiary “Petro Oil and Chemicals”, placed a winning bid of ₴805 million ($20 million) to acquire 100% of the state-owned Ukrainian construction giant Ukrbud. The price was more than triple the starting bid — and the auction, held under the auspices of the State Property Fund of Ukraine, was praised for its transparency and competitiveness.
Ukrainian media reported with optimism. “Ukrbud has a new international owner,” headlined a piece by PLTMBK.in.ua, highlighting GIG’s long-term interest in the country and quoting investor David Bezhuashvili — a well-known Georgian businessman with previous diplomatic and political experience. GIG had already invested over $30 million in Ukraine, including stakes in the American University Kyiv, pharmaceutical company “Indar”, and a long-term concession of the Kherson sea port.
Bezhuashvili expressed hope that Ukrbud would become a symbol of post-war recovery and modernization of Ukraine’s construction and engineering sector. The acquisition was supposed to mark a new chapter.
But that chapter was never opened.
Sudden reversal: “classified concerns” and a disqualified winner
Only days after the auction, acting head of the State Property Fund, Ivanna Smychilo, annulled the results. The reason? An internal memo flagged alleged connections between the winning company and unnamed sanctioned individuals. The details were not disclosed — the memo is classified as “for official use only.”
No specific violations were made public. No legal hearing was held. And no chance for rebuttal was given. The investor simply lost the deal — and the mandatory security deposit of nearly $500,000.
In a twist, the second bidder, a firm named “Techno-Online”, automatically took the lead. According to open-source investigations and Ukrainian media, this company is linked to Maksym Mykytas, a former MP and figure in multiple anti-corruption probes, as well as Sergey Kiyashko, a Russian businessman who previously worked at an arms supplier for the Russian military.
Investor backlash and legal steps
GIG Holding has called the decision unlawful and politically motivated. Company director in Ukraine Irakli Katamadze said they would pursue legal action in Ukrainian courts and appeal to the General Prosecutor’s Office, Security Service (SBU), and Anti-Corruption Bureau (NABU).
“We followed all the rules, offered a record price, and were disqualified with no due process,” Katamadze said. “This sets a dangerous precedent.”
What’s at stake: Ukraine’s image as a safe investment destination
The reversal threatens to overshadow Ukraine’s messaging ahead of the Ukraine Recovery Conference in Rome. While the government plans to showcase its reform efforts and attract global capital, the Ukrbud case highlights the fragility of trust between Ukraine and international investors.
Diplomats and economic observers note that Ukraine’s strategic priority is to build a reputation of rule of law, fairness, and transparency — all of which are now questioned by this case.
For many, this is not just a failed deal. It is a test of Ukraine’s institutional maturity and commitment to playing by global business rules.
“We came to invest in rebuilding Ukraine. We believe in the country. But we also need legal certainty and protection,” Bezhuashvili said in an earlier interview.
Whether that belief will survive the fallout from this reversal — remains uncertain.
