Editor’s note: This story has been updated to include tycoon Vasyl Khmelnytsky’s comment.
Ukrainian tycoon and former politician Vasyl Khmelnytsky confirmed he had bought the highly-coveted Bilshovyk machinery plant alongside his partner Andriy Ivanov and real estate developer Oleksiy Baranov for a trifling $53 million at an auction on Oct. 27.
It’s the largest state asset sold for the last 16 years, in the framework of President Volodymyr Zelensky’s Big Privatization program aimed at selling the state’s properties to fill the government’s coffers.
Khmelnytsky and Ivanov bought it through an obscure company linked to the tycoon’s holding UDP.
“As a UDP shareholder, I congratulate the partners on winning the open auction,” reads the statement obtained by Ekonomichna Pravda news outlet.
Experts believe the market price, in a fair sale, could have easily tripled the starting price, reaching up to $150 million, the Kyiv Post reported on Oct. 21.
However, the winner, a little-known company called General Commerce, paid a mere $2 million more than the starting $51 million for the whole 35-hectare plant, standing at the crossroads of busy transport arteries leading to Kyiv’s main street Kreshchatyk.
It took only six minutes for the company to win the auction, where three investors bid $740,000 (Hr 20 million) each.
General Commerce is based in Cyprus and registered in Kyiv, with a capital of $150 (Hr 4,000). The company will also get a one-hectare plot at Trukhaniv Island in the heart of Kyiv and several smaller plots in the city.
The buyer is linked to UFuture, a holding company that belongs to Khmelnytsky, Novoe Vremya reported.
General Commerce was involved in the legal actions regarding the development of a popular recreational area at Arsenalna Square in central Kyiv – the project of Khmelnytsky’s UFuture – according to the Unified State Electronic System in the field of construction.
Read also: Tycoon Khmelnytsky’s business empire gives him upper hand in Bilshovyk sale
The State Property Fund announced earlier that more than 15 investors were interested in purchasing the asset, but the vast majority backed down by fear of legal hurdles.
Dmytro Sennychenko, head of the State Property Fund of Ukraine, holds a ‘symbolic’ paycheck with a representative of the winning company General Commerce, linked to businessman Vasyl Khmelnytsky, who bought the Bilshovyk machine-building plant in Kyiv for $53 million at an auction on Oct. 27, 2021. (Facebook/ Dmytro Sennychenko)
Dmytro Sennychenko, the head of the fund, said he believes that the auction on the Bilshovyk plant was transparent and “provided equal conditions for all investors.”
“The fund always stands for the protection of state interests,” Sennychenko wrote on Facebook.
Property market experts told the Kyiv Post that Khmelnytsky’s victory on the auction was expected.
In 2019, five workshops on the property, taking up 6,300 square meters, were illegally sold to some private companies and leased out until 2035.
Those companies are linked to Khmelnytsky and Ivanov, Liga.net reported. The workshops are not in one place but scattered throughout the territory, making it impossible to build contiguously.
Only one market player could benefit from this manufactured chaos — a Khmelnytsky-Ivanov duet.
A source close to the deal, who asked not to be named to avoid retaliation, told the Kyiv Post that, in reality, there was not a single actual participant in the auction.
“They either are companies related directly to Khmelnytsky and Ivanov or have close business relations with them,” the source said.
The 650,000–750,000 square meter area can be used to build residential property, offices, hotels, hospitals or a fitness center, according to Olexander Nosachenko, CEO of Colliers real estate consultancy.
After the auction, Khmelnytsky said the plant’s 35-hectare would be rebuilt to create “an innovative and comfortable infrastructure for the citizens” in the center of Kyiv.
