Large-scale development of Kyiv. Why does the owner of ATB chain need a building materials plant?

The privatization auction for the sale of the Aeroс enterprise, which was the largest producer of gas blocks in Ukraine, took place on December 19. Aeroс consists of two factories in Kyiv Oblast and a construction site in the town of Stryi in Lviv Oblast.

The auction was won by Trident Geoinvest Ukraine, a company from the BGV group owned by Hennadiy Butkevych, known as the co-owner of the ATB supermarket chain. The winning bid was 1.8 billion hryvnias ($42.8 million).

The Aeroc plant began operating in 2006 and quickly became a market leader in the production and sale of building materials.

It belonged to Russian developer Andrey Molchanov and was confiscated after the full-scale invasion began. It is currently not functioning.

Aeroc is the last lot of the large-scale privatization of 2024. Ukraine has already earned more than 10 billion hryvnias ($238 million) at auctions. The privatization of the plant could be a major milestone for a group of Rivne officials led by Stanislav Koval, who headed the State Property Fund (SPFU) in the fall of 2023. They continued the work of Rustem Umerov, who moved from the SPFU to the post of defense minister, and restarted the large-scale privatization. The starting price of the plant is over 950 million hryvnias ($23 million).

Learn more about the Aeroc plant in the LIGA.net analysis.

How did Aeroc appear on the Ukrainian market and what is it?

Gas blocks are a popular type of building material. They are actively used for the construction of residential complexes. They are also used as interior partitions and as exterior walls. You can see many houses now that do not have exterior decoration. They are built of gas blocks.

Aeroc was part of the assets owned by Russian developer and owner of the LSR Group, Andrey Molchanov. In particular, LSR owns large production sites in Moscow and St. Petersburg.

The company entered the Ukrainian market in 2006. According to the president of the Union of Building Materials Manufacturers, Kostiantyn Saliy, in a comment to LIGA.net, Ukraine has always been very attractive to mid-level Russian businessmen. Here they could hide their money from Putin in a clear, as they say, jurisdiction, in a clear coordinate system.

The owners of Aeroc built two factories in Kyiv Oblast, near Kyiv, which is a good market for building materials. The factories were located near the city, so they could quickly supply the necessary materials to local developers. In addition, aerated concrete was cheaper to produce and of higher quality than brick.

In the '90s and early 2000s, Ukrainian post-Soviet factories produced bricks. There were no new technologies there yet. And new players had not yet managed to enter this market. At that time, the first construction boom had already begun in Kyiv. Therefore, Aeroc had a quick success in the Ukrainian market, offering new, cheaper and higher-quality products.

"In the mid-90s, at the beginning of the 2000s, the construction business had to either buy low-quality Ukrainian bricks or high-quality ones from Europe. At that time, it cost from 30 to 65 euro cents per brick, which was expensive for local businesses that were just developing. Aerated concrete was very timely here," says Kostiantyn Saliy.

Why does Hennadiy Butkevych need the Aeroc plant?

Three companies, owned by Hennadiy Butkevych, Czech media magnate Tomáš Fiala, and little-known businessman Ikram Javadov, participated in the auction. Butkevych's company Trident Geoinvest Ukraine won.

Hennadiy Butkevych is a well-known figure in Ukrainian business. In addition to being a co-owner of the ATB supermarket chain, he also owns the BGV Group holding, which specializes in mining.

This year, Butkevych created a BGV Development division within the holding company, whose task is to build housing. In addition, the company already has a partnership with the famous Kyiv developer Andriy Vavrysh and his company SAGA Development to build the BOSTON Creative House residential complex in Kyiv's Obolon neighborhood.

Butkevych plans to develop this area of business. The company is building a shopping mall in Zhytomyr and a cottage town in the village of Lisnyky near Kyiv.

Key construction sites are located in northern Ukraine. Therefore, two construction materials factories in Kyiv Oblast, close to the main construction sites, will be useful for Butkevych.

What property did Hennadiy Butkevych receive?

Before the full-scale war, Aeroc was the leader in Ukraine in the production of aerated concrete. The company owned two factories in Kyiv Oblast. A new factory was planned in the town of Stryi, Lviv Oblast.

But the confiscation and subsequent suspension of production scrapped these plans. New manufacturers began to appear on the market, which quickly captured it. Plus, specialists from Aeroc began to look for work and move to new competitors of the enterprise.

"Now, if the new owner acquires Aeroc, the market is lost. Dealers may already be distrustful of an enterprise that has not been operating for some time. In addition, the question of the brand and marketing will arise. Aeroc is a well-known brand. But if the enterprise starts operating under a new name, it is unknown whether customers will come to it," says Kostiantyn Saliy.

However, there are still capacities at the factories that the new owner can restart.