Ukraine's Nova Poshta doubles investment in 2024 to 8.5 bln hryvni

MOSCOW. Oct 24 (Interfax) - Ukraine's Nova Group (Nova Poshta) has doubled its investment in 2024 from 2021 up to 8.5 billion hryvni, Nova Chief Financial Officer Pyotr Fokov said.

"Nova Group's investment will reach 8.5 billion hryvni this year, which is twice as much as it was in 2021," Ukrainian media quoted him as saying at the Ukrainian CFO Forum on Thursday.

The group invests in those sectors that make the delivery fast, simple and reliable, he said.

Fokov identified the priorities of the Nova Group's investment program, namely, developing the chain of post offices and post terminals across Ukraine, which includes opening new ones, repairing and bringing the existing ones to high standards.

Another priority is investment in automation of sorting facilities. "This includes new services, in particular, fulfillment, which implies outsourced logistics, under which an online store transfers goods for storage and order picking to a logistics operator," Fokov said, adding that the service makes the delivery of shipments to customers much faster.

Energy independence is an essential aspect of Nova's investment. The group invests in solar panels and gas cogeneration capacity to produce electricity for its own needs.

Fokov emphasized foreign investment, as Nova Group is operating on the markets of 15 countries. "And even this year the first foreign country has brought profit for us, though most of them have not done that as they are still approaching the break-even point," Fokov said.

Fokov named the group's own and borrowed funds as the core sources of investment funding. In particular, this is a loan of 3 billion hryvni from the European Bank for Reconstruction and Development (EBRD), which was received in 2024.

"We signed an agreement for 3 billion hryvni with the EBRD this year. We received the first loan six years ago at the minimum amount of 180 million hryvni. We built the facility and repaid the loan in time, now we have a strong (credit) history for 3 billion hryvni," Fokov said, adding that the EBRD provides hryvna loans to Nova Group.

The group also draws loans from commercial banks, collaborating with 10 leading banks in Ukraine and pursuing a strategy aimed at unifying banking covenants. "We have 10 partner banks and each of them has its own requirements, which are essential to meet. This is quite difficult when you have 10 different covenant systems and you need to ensure the full compliance [with the requirements]. Our strategy aims to unify the covenants of all our business partners completely [...]. We have taken the most developed EBRD financial covenant system as a basis and we offer our partner banks, with whom we are starting to cooperate, to join this system or choose requirements from this menu. So far, we have succeeded in doing so [...]," Fokov said.

Whether a bank gives a consent to this offer depends on the size and reputation of the company, he said. "If there is a strong reputation, it is easier to do so, because there is a certain negotiating power. This can be done when you have a partner like the EBRD or other international finance institutions," Fokov said.

Hryvna-denominated bonds issued by Nova Group constitute another source of financing its investment program, Fokov said. Having issued the bonds in January 2023, the group became the first to resume raising funds through this type of debt financing after the crisis broke out, he said.