The European Bank for Reconstruction and Development allowed $65 million loan to Ukraine’s Datagroup to boost its digital growth
Some days ago, the EBRD allowed a loan equivalent to $65 million to boost Datagroup to increase its figure.The company has the majority owned by a fund managed by Horizon Capital. However, this will primarily finance the acquisition of Volia, firm of Datagroup, to become more competitive in telecommunications sector with high quality of service.
Datagroup is a leading national fibre infrastructure and digital services provider in Ukraine, is purchasing Volia with its subsidiaries : AB Ukraine Limited Liability Company, Oisiw Limited, CDC Falstap, Telesvit LLC, Volia Limited Company, the country’s leading pay-TV and cable broadband service provider in the retail segment, with the financial backing of the European Bank for Reconstruction and Development (EBRD).
Matteo Patrone, EBRD Managing Director, Eastern Europe and the Caucasus, explained:
“At the EBRD we believe in the power of technology to bring about change for the better. Ukraine’s increasing digitalisation requires large-scale investments to expand coverage, accelerate speed and improve quality. Soon Ukrainian consumers will reap the benefits of Datagroup and Volia joining forces. The merged entity will invest in better infrastructure, innovation and excellent customer service, making it easier for all to connect with each other.”
Lenna Koszarny, Horizon Capital’s Founding Partner and Chief Executive Officer, added
“We are delighted that the EBRD is backing our vision of bringing Datagroup and Volia together. This merger will create a platform of sufficient scale to attract substantial capital investments to modernise Ukraine’s last-mile and national fibre infrastructure. The EBRD is a valued partner of Horizon Capital and its portfolio companies, providing expansion loans to increase production capacity, acquisition financing to grow businesses and fund commitments to attract private capital to the region. The success of Datagroup and Volia will serve to promote Ukraine’s investment attractiveness and ultimately bring more foreign direct investment to the country.”
Datagroup is also committing to expand its internship programme and provide greater training and employment opportunities for young women and men. In the past two years alone, the Bank has committed €2 billion to the economy. The investments are combined with support for policies that promote the fight against corruption, good governance of state-owned enterprises, structural reforms and a more transparent business environment.
Regarding Horizon Capital that is a leading private equity firm in emerging Europe, backed by over 40 institutional investors with a capital base of over $350 billion, managing four funds with assets under management of over $850 million and a tenure of 25 years in the region. The firm is a growth equity investor, backing visionary entrepreneurs leading transformational businesses in Ukraine and the near region.
In Decembre 2020, Datagroup acquired 100% of Volia group of companies in Ukraine, with the full backing of Horizon Capital’s EEGF II fund. Lenna Koszarny, from Horizon Capital’s Founding Partner and Chief Executive Officer, commented the deal:
“The vision of uniting these two companies, both private-equity backed, has been a long-held dream within Horizon Capital and Datagroup. We are thrilled to realize the opportunities from merging two companies which are such a natural fit for each other. Both Datagroup and Volia operate in a highly fragmented industry which historically has meant limited investor interest and capital invested. Scale truly does matter when it comes to infrastructure to meet the demands of increasing digitalization, requiring significant capital investments to modernize and expand both last-mile and national fiber infrastructure. The winners from this merger will be Ukraine’s consumers and the country as a whole, as Ukraine needs significant backbone infrastructure investments to meet the demands of the digital age. I wish to extend a sincere thank you and appreciation to Volia’s talented management team and dedicated shareholders, who truly have built a successful business committed to delivering quality service, continuous innovation and exceeding customer expectations, and to the stellar Datagroup team!”
The second expert, Mykhailo Shelemba, Datagroup Chief Executive Officer and shareholder, added further:
I look forward to this new, exciting chapter in the Company’s development. The fixed broadband market in Ukraine is extremely fragmented with over 5,000 internet service providers operating in the country. This large fragmentation does not allow most players to maintain high investment levels necessary to continuously introduce new technologies for their customers, which is critical in this modern, digital world. The merger of Datagroup and Volia will allow us to realize operational synergies, invest into modernization of our networks, continue to provide best-in-class service for our customers, and create greater opportunities for our employees. Each company focuses on different customer segments — Datagroup is the leader in B2B segment with only 15% of its revenues generated by B2C, while Volia is the leader in the B2C segment with less than 5% of its revenues generated by B2B customers. Post-integration, the combined business is expected to generate revenues exceeding $130 million and over $50 million in EBITDA, with one of the lowest leverage ratios among large telecom companies in the CEE region. We hope that our example will pave the way for greater investor interest and significant investments in Ukraine’s infrastructure throughout the country, by both domestic and global players. We believe in Ukraine and its future!”
