EBRD, IFC Join Forces to Invest in Dragon Capital’s Ukraine Rebuild Fund
The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) have announced a joint investment of US$ 50 million in Dragon Capital’s Rebuild Ukraine Fund. Each institution is committing US$ 25 million to support the fund, aimed at bolstering small and medium-sized enterprises (SMEs) and mid-cap companies in Ukraine.
Investment Goals and Impact
The Rebuild Ukraine Fund will focus on providing long-term equity and quasi-equity financing for Ukrainian businesses. This initiative seeks to foster growth amid challenges posed by the ongoing conflict in the region, particularly due to Russia’s full-scale invasion.
- Total Capital Target: US$ 250 million.
- Investment Focus Areas:
- Consumer retail and services
- Healthcare
- Financial services
- Construction materials
- Agriculture
Supporting Ukraine’s Economic Recovery
These investments aim to strengthen Ukraine’s private equity ecosystem, which is essential for economic resilience. SMEs are critical for job creation and economic stability. Access to diverse financing sources remains crucial as traditional bank financing is limited due to the war.
By reinforcing the private equity asset class in Ukraine, the EBRD and IFC are actively contributing to the development of the country’s economic landscape. Arvid Tuerkner, EBRD Managing Director for Ukraine and Moldova, emphasized the importance of this partnership, stating it demonstrates faith in Ukrainian businesses and could attract additional investment.
Challenges and Support Mechanisms
Many Ukrainian businesses, particularly smaller firms, face difficulties in securing equity financing. Alfonso García Mora, IFC Vice President for Europe, highlighted that this investment will support key sectors, including agriculture, construction, and technology.
To address investment risks, a portion of the IFC’s investment will be backed by guarantees from the European Commission and the French government through the Ukraine Investment Framework. This support aims to enhance IFC’s Economic Resilience Action Program for Ukraine.
Dragon Capital’s Role
Dragon Capital is a prominent investment management firm in Ukraine, founded in 2000. With over 20 years of experience, the firm has been involved in managing funds and investing in various sectors, including manufacturing and real estate.
The partnership with EBRD and IFC signifies a strong endorsement of Ukraine’s private sector potential. Tomas Fiala, Founder of Dragon Capital, expressed pride in collaborating with such esteemed institutions, viewing it as a crucial step towards supporting local businesses and facilitating recovery.
Conclusion
The combined efforts of EBRD and IFC in funding Dragon Capital’s Rebuild Ukraine Fund mark a significant milestone for Ukraine’s economic recovery. Their commitment not only provides essential capital but also reinforces confidence in the country’s future growth.
