The International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) are collaborating to support Ukraine’s economic recovery. Each institution is investing $25 million in the Rebuild Ukraine Fund, managed by Dragon Capital. The total aim of this fund is to raise approximately $250 million to assist small and medium-sized enterprises (SMEs) and mid-cap companies in Ukraine.
Investment Details
The agreement was formalized during the Rebuild Ukraine conference held in Warsaw on November 13-14. Both the IFC and EBRD have emphasized the necessity of this funding to help Ukrainian businesses expand and recover from the effects of the ongoing war.
Objectives of the Fund
- Provide equity and quasi-equity financing to SMEs and mid-cap firms.
- Focus on sectors crucial for wartime resilience and post-war recovery.
The targeted sectors include:
- Consumer retail and services
- Healthcare
- Financial services
- Construction materials
- Agriculture-related industries
Key Statements
According to a joint statement from the involved parties, the initial investments send a strong message to institutional investors about the importance of supporting Ukraine. Alfonso Garcia Mora, the IFC’s Vice President for Europe, Latin America, and the Caribbean, noted that many smaller businesses find it difficult to access equity financing. The support aimed at sectors like agriculture and construction is expected to create jobs and stimulate economic growth.
EBRD Managing Director for Ukraine and Moldova, Arvid Tuerkner, highlighted the fund’s role in providing critical capital to SMEs, reinforcing the groundwork for Ukraine’s economic future.
Risk Mitigation Strategies
To minimize investment risks, part of the IFC’s financial contribution is secured by guarantees from the European Commission and the French government. This backing supports the IFC’s Economic Resilience Action (ERA) Program for Ukraine.
Future Prospects
Tomas Fiala, founder of Dragon Capital, expressed optimism regarding the investment, stating it demonstrates confidence in Ukraine’s private sector. He underscored the fund’s potential to provide essential capital for businesses to adapt and grow amidst challenging circumstances.
Additional Financing from EBRD
In a related development, the EBRD announced a loan of €22.3 million (approximately $26 million) to Power One, a Ukrainian energy firm within the Dragon Capital group. This funding is designated for a decentralized energy generation project.
