BlackRock and JP Morgan helped set up the Ukraine Reconstruction Bank

BlackRock and JPMorgan Chase are helping the Ukrainian government set up a reconstruction bank to channel public seed capital into reconstruction projects that have attracted hundreds of billions of dollars in private investment.

The Ukraine Development Fund remains in the planning stages and is not expected to be fully launched until after the end of hostilities with Russia. But investors will have a preview this week at a London conference co-hosted by the British and Ukrainian governments.

“Many of today’s long-term challenges are best resolved through blended finance and this is one of them. You need these vehicles to raise capital at scale,” said Philipp Hildebrandt, Vice President at BlackRock. Who will discuss work on Wednesday.

world Bank estimated in March Ukraine will need $411 billion to rebuild after the war, and recent Russian attacks have pushed that figure up.

The Kiev government hired BlackRock’s consulting arm in November to determine how to attract that kind of capital, and then in February enlisted JPMorgan. Ukraine’s President Volodymyr Zelensky announced last month that the country was working with two financial groups and consultants at McKinsey.

No formal fundraising target has been set, but people familiar with the discussions say the fund is seeking to raise low-cost capital from governments, donors and international financial institutions and raise five to 10 times as much private investment. Taking advantage of this to attract more.

BlackRock and JP Morgan are donating their services, though the assignment will give them an early look at potential investments in the country. The assignment also deepens JPMorgan’s relationship with its longtime client. The bank has helped Ukraine raise more than $25bn in sovereign debt since 2010 and last year led the country’s $20bn debt restructuring.

The financiers consulted with private and public sector investors and found that they wanted to help Ukraine, but were concerned not only about the war damage but also about the country’s governance, lack of transparency, and shallow capital markets. .

BlackRock advised that Ukraine needed a development finance bank to find investment opportunities in areas such as infrastructure, climate and agriculture, and to make them attractive to pension funds and other long-term investors and lenders. JP Morgan was brought in partly for its lending expertise.

Stephen Weiler, JP Morgan’s head of debt capital markets for Central Europe, the Middle East and Africa, said: “The fund is being set up to give public and private sector investors the opportunity to invest in specific projects and sectors. ” “There will be separate sectoral funds which are funds identified as priorities for Ukraine. The objective is maximum capital participation.

The structure is said to use low-cost public money, known as concessional capital, to make the initial investment and absorb losses first.

“The assumption is that this initial seed capital will be a risk-averse mechanism, and that it will open up the possibility for private sector capital to come in at a larger scale,” said Brandon Hall, co-head of BlackRock’s financial markets advisory arm. “Ukraine will have its own organization to source and syndicate these local investment opportunities.”

To address investor concerns about governance, the fund is expected to stock its board with representatives from international financial institutions and governments, and hire investment professionals to execute its strategy.

“Our view is that if you have a strong governance structure and a set of internationally credible stakeholders who are in leadership positions in this fund, it will go a long way,” Hall said.

BlackRock’s advice has drawn on its work for the Saudi National Development Fund and the Climate Finance Partnership, a blended finance vehicle that directs investments in sustainability projects in emerging markets. McKinsey did not respond to a request for comment.

Currently, Ukraine’s work is focused on setting up structures, governance and practical procedures as most investors want to wait for the end of hostilities. “The important part is that Ukraine is already thinking ahead,” Weiler said. “When the war is over, they want to be ready and start the rebuilding process right away.”

BlackRock and JPMorgan Chase are helping the Ukrainian government set up a reconstruction bank to channel public seed capital into reconstruction projects that have attracted hundreds of billions of dollars in private investment.

The Ukraine Development Fund remains in the planning stages and is not expected to be fully launched until after the end of hostilities with Russia. But investors will have a preview this week at a London conference co-hosted by the British and Ukrainian governments.

“Many of today’s long-term challenges are best resolved through blended finance and this is one of them. You need these vehicles to raise capital at scale,” said Philipp Hildebrandt, Vice President at BlackRock. Who will discuss work on Wednesday.

world Bank estimated in March Ukraine will need $411 billion to rebuild after the war, and recent Russian attacks have pushed that figure up.

The Kiev government hired BlackRock’s consulting arm in November to determine how to attract that kind of capital, and then in February enlisted JPMorgan. Ukraine’s President Volodymyr Zelensky announced last month that the country was working with two financial groups and consultants at McKinsey.

No formal fundraising target has been set, but people familiar with the discussions say the fund is seeking to raise low-cost capital from governments, donors and international financial institutions and raise five to 10 times as much private investment. Taking advantage of this to attract more.

BlackRock and JP Morgan are donating their services, though the assignment will give them an early look at potential investments in the country. The assignment also deepens JPMorgan’s relationship with its longtime client. The bank has helped Ukraine raise more than $25bn in sovereign debt since 2010 and last year led the country’s $20bn debt restructuring.

The financiers consulted with private and public sector investors and found that they wanted to help Ukraine, but were concerned not only about the war damage but also about the country’s governance, lack of transparency, and shallow capital markets. .

BlackRock advised that Ukraine needed a development finance bank to find investment opportunities in areas such as infrastructure, climate and agriculture, and to make them attractive to pension funds and other long-term investors and lenders. JP Morgan was brought in partly for its lending expertise.

Stephen Weiler, JP Morgan’s head of debt capital markets for Central Europe, the Middle East and Africa, said: “The fund is being set up to give public and private sector investors the opportunity to invest in specific projects and sectors. ” “There will be separate sectoral funds which are funds identified as priorities for Ukraine. The objective is maximum capital participation.

The structure is said to use low-cost public money, known as concessional capital, to make the initial investment and absorb losses first.

“The assumption is that this initial seed capital will be a risk-averse mechanism, and that it will open up the possibility for private sector capital to come in at a larger scale,” said Brandon Hall, co-head of BlackRock’s financial markets advisory arm. “Ukraine will have its own organization to source and syndicate these local investment opportunities.”

To address investor concerns about governance, the fund is expected to stock its board with representatives from international financial institutions and governments, and hire investment professionals to execute its strategy.

“Our view is that if you have a strong governance structure and a set of internationally credible stakeholders who are in leadership positions in this fund, it will go a long way,” Hall said.

BlackRock’s advice has drawn on its work for the Saudi National Development Fund and the Climate Finance Partnership, a blended finance vehicle that directs investments in sustainability projects in emerging markets. McKinsey did not respond to a request for comment.

Currently, Ukraine’s work is focused on setting up structures, governance and practical procedures as most investors want to wait for the end of hostilities. “The important part is that Ukraine is already thinking ahead,” Weiler said. “When the war is over, they want to be ready and start the rebuilding process right away.”