Volodymyr Yakubovskyy sat down with Kyiv Post in the beginning of the month. Below is the full interview:
Volodymyr Yakubovskyy is probably going to spend his Christmas holidays the hard way.
He already caught the flu during cold season and there’s no time left for him to take leave. He needs to chug through piles of papers from numerous cases at Nobles law firm.
Yakubovskyy’s firm has advised on several merger-and-acquisition transactions each worth roughly $1 billion. And Nobles has to be hawkish when it competes among other bidders to win particular cases at announced tenders.
To increase its output, the law firm merged with Phenomena law firm in 2017. That boosted its capabilities and human capital, allowing it to take on more clients and projects. Today Nobles has a team of over 20 professionals and 5 partners, with seven of them coming from Phenomena.
“Nobles is currently Germany-oriented, because it emerged as a spin-off from the German law firm Noerr,” Yakubovskyy told the Kyiv Post during an interview at the Hyatt Regency hotel in Kyiv.
Currently, Nobles and Noerr still have a cooperation agreement for whenever Noerr’s German clients are interested in Ukraine. “The German government and Chancellor (Angela) Merkel want to spur German investments into Ukraine,” he said.
Convincing German investors
But convincing German businesses to invest in Ukraine is another thing entirely. There are several critical obstacles standing in the way.
First, “the German economy nowadays attracts lots of foreign investments itself,” Yakubovskyy said. Germany has a strong economic climate with positive 2.2-percent gross domestic product growth. This provides plenty of opportunities for Germans to invest domestically.
Second, “they are repulsed by Ukrainian corruption, and are interested in seeing corruption uprooted.”
Third, German companies want to “make their profits and bring them to Germany without the need to deal with the regulations of the National Bank of Ukraine directed against syphoning of money to off-shores.”
But besides advising large German corporations, NOBLES is also looking toward the German Mittelstand, or family-run businesses with international aspirations. These firms are more agile than corporations and they continue to eye investment opportunities in Ukraine. One successful case is a 5-million-euro industrial asset investment by a German private entrepreneur a year ago.
Yakubovskyy would not disclose the name of the company, but says the investor is happy with the investment. “He is even considering new opportunities worth about 20 million euros, perhaps investing in a hotel,” the lawyer said.
Another example is an elevator project by German grain company Wendeln in Kherson Oblast at the turn of the millennium. The whole project was worth 10 million euros.
But it never took off due to its bad location, poor logistics, and distance from critical infrastructure. Last year it was sold for less than 1 million euros.
"Ukrainian way’
To avoid situations like this, Yakubovskyy advises German investors to “do the business the Ukrainian way.” Primarily, this means the owner must be personally involved in developing his or her business in the country.
“The entrepreneur must stay here and control the business personally, or through a very trusted person,” Yakubovskyy said.
At the same time German investors “shall remain true to themselves, as Ukrainians respect them here because of their socially-minded approach of doing German business.”
One reason German companies command respect is because there are no huge salary differences between the rank-and-file employees and top-management, Yakubovskyy says.
It’s also better for the investor if their business is export-oriented, as it will more likely be successful. A good example of this is Yakubovskyy’s previous employer: Noerr’s former office in Ukraine. It entered Ukraine with expectations of charging European-level billing rates and “faced strong local competition.”
Eventually Noerr had to restructure. But Yakubovskyy says Nobles’ founders learnt the lesson: they lowered the rates and became more successful.
Ongoing war
Beyond the ordinary challenges of doing business in Ukraine, Russia’s ongoing war against the country and the government’s recent decision to introduce martial law are also hurting the country’s image among investors. Businesses simply cannot predict whether the business environment is sustainable.
For foreign businesspeople, the mere mention of martial law or war is enough to make them turn their backs on Ukraine and look to invest their money elsewhere.
This situation “postpones investment projects in the same way as it happened during the EuroMaidan Revolution” in 2014, Yakubovskyy says.