OKKO Group has invested about $650 mln since start of war
OKKO Group, which owns one of Ukraine's two largest gas station chains, has invested about $650 million in various projects in Ukraine since the start of the full-scale invasion, including around $100 million in the GORO Mountain Resort project, OKKO Group CEO Vasyl Danyliak said.
"We have already identified a number of sectors in which we want to seriously develop and become worthy competitors to the existing players in those markets. We have identified energy, agricultural processing and biofuel production as priorities," he said at the Forbes Money forum held recently in Kyiv.
Danyliak said that OKKO Group wants to reduce the dependence of its profitability and cash flows on its core oil products business. According to him, during the war years the market volume declined by 2 million tonnes to 10.5 million tonnes, "and we do not yet foresee any boom in consumption."
"Accordingly, we expect that this year about 25% of our revenues should already come from non-fuel businesses. Our goal is for those revenues to equal fuel business revenues by 2030, and by 2033 revenues from non-fuel businesses should be approximately twice as high as revenues from our historical fuel business," the OKKO Group CEO said.
Danyliak said that OKKO has a huge B2B business, with the group working in one way or another with about half of Ukraine's companies, making it natural to expand such cooperation into natural gas, electricity and mineral fertilizer supplies.
"Accordingly, we began looking at the assets where we already work in B2B: gas assets, gas production, then we started looking at energy and agriculture. And we saw opportunities: first we entered a small solar project, then a large wind project, then an even larger wind project," he said, describing OKKO's investment history in other sectors.
According to the CEO, the group had been considering investments in energy assets even before the start of the full-scale invasion, and now this market has good growth prospects. Therefore, next year the group will complete its second wind farm with a capacity of 190 MW in addition to the first 150 MW wind farm already in operation, while construction of a third wind farm with a capacity of around 320 MW will begin next year.
As for the core fuel business, Danyliak said OKKO also wants to continue progressing in that segment.
"Our goal is to increase our market share. But we have never played the game of increasing market share at the expense of profitability. Accordingly, we will follow a somewhat unconventional path in order to strengthen our position in this market, maintain solid representation and remain the industry leader," he said.
Regarding the investment approach, Danyliak noted that foreign investors apply "unrealistically high discount coefficients" in their plans.
"We live in this country, we communicate with our colleagues from other industries, and we fully understand that despite the war there are essentially no distressed prices or distressed situations. Therefore, we evaluate every business project we enter in the same way we evaluated projects before the war," the OKKO Group CEO explained.
"We calculate IRR, ROE... Here it is necessary to assess the project cycle, the long-term perspective... We also need to look at the market potential 10-15 years ahead," Danyliak added.
