Mr. Johann Jonach,
President of ALFA CAPITAL (UKRAINE)

The years of independence have been marked by Ukraine with considerable changes.
New opportunities for investors in various sectors of Ukraine’s national economy have been opened.
The process of privatization attracts a growing number of investments not only from domestic but also from foreign investors. Any kind of financial activity in such a rapidly changing environment is a risky and challenging business and demands a lot from those who are involved in it.
One should have enough experience, be well informed, understand the situation well and be capable of assessing investment possibilities and risks.

ALFA CAPITAL (UKRAINE) does have all these qualities. It entered the Ukrainian market 30 months ago and has become since then the leading investment house in Ukraine. It is one of the participants of the Ukrainian Association of Investment Business. ALFA CAPITAL (UKRAINE) also participates actively in the work of the Council and the committees
of the Electronic Securities Trading System Association which is the major entity of its kind in Ukraine.
No wonder that ALFA CAPITAL’s experts have gained considerable experience and have made
important contributions to the development of the Ukrainian securities market. At the same time they have achieved a high reputation in their sphere of activity.
Mr. Johann Jonach, President of ALFA CAPITAL (UKRAINE) spoke to Welcome-to-Ukraine correspondent Andriy Shestakov about his company’s work, achievements and problems.

WU: What were you planning to achieve when you entered Ukraine’s market?
Jonach: We began functioning in 1995 when, for all practical purposes, there was no such thing in Ukraine as a securities market. And now we are not only one of the «veterans» of this market but also the biggest brokerage in Ukraine. From the very start we were striving to be a link between the interests of Ukrainian companies on the one hand and investors, particularly foreign ones who are looking for attractive investment targets, on the other.
I believe that we have achieved this goal which is being confirmed by our success in working mainly with portfolio investors during 1997 which made Alfa Capital (Ukraine) the biggest player in the market. Then the sector which attracted most interest was energy production and distribution. It was also the area where privatization of the biggest Ukrainian companies started. Today’s situation in the securities market is much more complex. It has been affected by the crisis which started in South-East Asia last fall and continues to depress equity prices in Ukraine. Especially in these circumstances investments in high quality companies and adequate advice as available from us is of major importance. At the same time Ukrainian share prices are now probably among the cheapest in the world which offers lots of opportunities for the astute investor.

WU: In which way has this situation affected your company?
Jonach: Given the decline in interest among portfolio investors for equity investments into Ukraine we were forced to come up with other investment possibilities. Currently investments into Ukrainian treasury bills and private equity investments are on top of the agenda. We noticed this change of attitude early enough in order to develop the necessary infrastructure within our company and again managed to achieve a leading position in these areas. We work with quite a few strategic investors who want to invest into projects in Ukraine in order to get a position in this big and quickly developing market.
At the same time it has to be said that Ukraine will be able to use its enormous potential only if it manages to speed up economic reforms, increase privatization and work out a more stable legal basis. A lot will depend on the work of the authorities and the new Parliament. Principal interest among strategic investors is very high but concrete results are much more difficult to achieve than in the sphere of portfolio investment. We hope that our investment banking and corporate finance activities will contribute to a size-able increase in direct investment into Ukraine.

WU: Which branches of Ukraine’s economy are foreign investors interested in most, and what is your contribution to getting them interested?
Jonach: The biggest interest from portfolio investors is in the energy sector and in the metallurgical and chemical industries. Strategic investors so far are mainly interested in food processing, media, services and in machine-building. Alfa Capital has built up extensive research capabilities and takes an active part in promoting Ukraine as an interesting country for investment worldwide via conferences, seminars and many direct contacts.

WU: Would you say a few words about your confidence in success and which factors of your activities you consider to be the most important?
Jonach: The main factor for success in our business is reliability and professionalism. The best way to show that is to build up a corresponding track record. I believe that we were able to do just that since the start of our activities and this helps us today. We see this in the increasing number of our clients, most of whom are referred to us by existing customers.
Another important factor are our employees. Our staff are mainly Ukrainians who were trained by us and are working according to international standards which they managed to achieve very quickly. Ukraine’s intellectual potential is extraordinarily high which, by the way, can also be seen in the high-tech industries. This is one of the reasons why we are currently working on creating a Technology Fund. Finally, I would also mention openness and transparency as a major guideline in our work. This is something where Ukrainian capital markets still have to improve considerably to be successful in the longer term.

WU: Could you, please, say a few words about your cooperation with the EBRD?
Jonach: We have good contacts with the Kyiv representative office of the EBRD and with its headquarters in London. At the moment we are working on some concrete projects, one of those is the Technology Fund mentioned already. We value the experience of the EBRD in the transition economies of Central and Eastern Europe highly and see many parallels in our work. Generally, we are interested in good contacts not only with institutions like the EBRD but with all major players in the Ukrainian market. We consider wide contacts and good business practices as our biggest capital.

WU: ALFA CAPITAL (UKRAINE) has sponsored many cultural projects in Ukraine. By being a patron of the arts it contributes to the promotion of art in Ukraine and art has always been one of the things we take pride in. Using this occasion we would like to join our artists in expressing gratitude for your patronage of art. But what is it exactly that motivates your sponsorship?
Jonach: Our life does not only consist of money but also of feelings, emotions of the heart, culture. Striving for all of these things has always been important and especially now, at a time when Ukraine is going through considerable hardship, we believe that it is our duty to give encouragement and financial support to art in Ukraine and we intend to continue along those lines also in the future.

WU: Welcome to Ukraine Magazine, one of whose main aims is to acquaint the world with the artistic and other achievements of Ukraine, wishes your company success in its fruitful work in Ukraine and will be always glad to meet you again on its pages.