Ministry of Economy of Ukraine announces further details on the establishment of the Ukraine Development Fund (UDF)

The Ministry of Economy of Ukraine published today additional details on the establishment of the recently announced Ukraine Development Fund (UDF) and the investment opportunities expected to be brought about by this new institution.

The UDF is designed as a national Development Finance Institution, sponsored by the Ukrainian Ministry of Economy. It will complement the work of other international institutions by increasing the number of high-quality investment opportunities for private capital to participate in the reconstruction of Ukraine. The Ministry of Economy is following an organizational blueprint which is designed to ensure transparency in the capital allocation process and project preparation. BlackRock’s Financial Markets Advisory group is advising the Ministry of Economy on a pro bono basis.

In the context of the Ukraine Recovery Conference taking place in London on the 21st and 22nd of June, the Government of Ukraine and BlackRock are conducting meetings this week with public and private sector stakeholders to provide further details on the UDF’s progress to date.

The presentation found at this link [2] provides an overview of the fund and next steps.

Key points to note:

• The preparation work for the UDF is underway. It is targeting a rapid launch once hostilities have ceased.
• The UDF is being developed as a standalone institution that follows international best practice and investment processes. It will be guided by strong governance and global standards for sound financial and risk management, with arms-length relationships with the Ukrainian and international governments.
• Through blended finance and strong alignment with public and private local actors, the UDF will seek to de-risk investment opportunities, and play a catalytic role in developing a deeper pipeline of bankable projects fit to attract significant capital into the Ukrainian economy.
• The UDF will focus on five key sectors of the Ukrainian economy (energy, infrastructure, agriculture, manufacturing, and IT), encompassing a potential investment market of $50+bn for private capital targeted by the Fund and other institutions investing in Ukraine.
• The UDF will provide de-risking solutions and financial instruments and will:
  • Align Ukraine behind investment projects through broad government support and “skin in the game”
  • Address funding gaps through concessional financing, and provide project preparation support
  • Be a self-sustaining institution that ensures investment continuity as international priorities and markets evolve
  • Align with Ukraine’s industrial policy priorities to help the country become a leading international investment destination
• The UDF will support Ukraine’s modernization and transformation into an attractive international investment destination. 
• The UDF will support Ukraine’s role in decarbonization and the green transition and as the gateway to European energy security. This will strengthen Ukraine’s role as a key partner to the global community in decarbonization, establishing new sources of energy for Ukraine, Europe, and the world.

IC UAC according to the MEU [3]