The International Finance Corporation (IFC) from the World Bank Group and the European Bank for Reconstruction and Development (EBRD) are each to invest $25 million in the Rebuild Ukraine Fund.
The fund, managed by Tomas Fiala’s Ukrainian investment company Dragon Capital, will offer long-term equity and quasi-equity financing to small and medium-sized enterprises (SMEs) and mid-cap companies.
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According to a joint statement from the IFC, EBRD and Dragon Capital, the goal is to help Ukrainian businesses expand and support the country’s reconstruction after the war.
In total, the fund aims to deploy some $250 million in total capital across sectors essential to Ukraine’s wartime resilience and postwar recovery, including consumer retail and services, healthcare, financial services, construction material and agri-related sectors.
“The EBRD and IFC’s anchor investments of $25.0 million (EUR 21.8 million) each will help the fund to achieve a viable first close and send a strong signal to the market highlighting the importance of investing in Ukraine,” the joint statement read.
The agreement was signed at the Rebuild Ukraine conference in Warsaw on Nov. 13-14.
“Many Ukrainian companies, especially smaller ones, struggle to access equity financing. With support from the EU and France, IFC’s investment in Dragon Capital’s Rebuild Ukraine Fund will boost key sectors like agriculture, construction, and technology – helping businesses grow, create jobs, and drive Ukraine’s recovery,” said Alfonso Garcia Mora, the IFC’s Vice President for Europe, Latin America and the Caribbean.
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EBRD Managing Director for Ukraine and Moldova, Arvid Tuerkner, said that the fund will “not only provide vital capital to SMEs and mid-caps, but also reinforce the foundations for Ukraine’s economic and future growth.”
“We hope our investment will be a testament to the resilience and potential of Ukrainian businesses, and attract more institutional investors to Ukraine,” Tuerkner added.
To reduce investment risk, a portion of IFC’s contribution will be backed by guarantees provided by the European Commission under the Ukraine Investment Framework and the French government as part of IFC’s Economic Resilience Action (ERA) Program for Ukraine.
Tomas Fiala, Dragon Capital’s founder, said that the investment “sends a strong signal of confidence in the country’s private sector and its future.”
“The Fund will provide much-needed capital to help Ukrainian businesses adapt, grow and lead the recovery process,” he added.
On Thursday, the EBRD said that it would lend €22.3 million euros ($26m) to Ukrainian energy company Power One, a company in the Dragon Capital group, for a project to develop decentralized generation.
