Agreement on the reconstruction of Ukraine

Swedfund, together with the EBRD (European Bank for Reconstruction and Development) and anumber of other development financiers, has the 21^st of June signed an MoU (Memorandum of Understanding) on investments in the private sector as part of the reconstruction of the country.

Several European development finance institutions are now stepping up their efforts to prepare for the reconstruction of Ukraine. This is done by the European Bank for Reconstruction and Development (EBRD) together with development financiers from all over the world signing a Memorandum of Understanding (MOU). The aim is to create a framework for cooperation in co-investments in Ukraine, mainly in the private sector.

- Swedfund and other development financiers have an important role to play in the reconstruction of Ukraine by contributing long-term and venture capital and creating conditions for mobilizing private capital. Through the MOU, we are pleased to work together to increase the scope, efficiency, and quality of investments in Ukraine and countries in Ukraine's immediate vicinity, says Maria Håkansson, CEO of Swedfund.

The investment needs in Ukraine to be able to build the country are extensive and it is not something that only one actor can implement. The private sector will play a crucial role in the Ukrainian economy. Coordination between Ukraine's partners will be needed to maximize the effectiveness and impact of efforts and investments.

Building on the G7 Leaders' Statement on Support to Ukraine and the G7 Leaders' Statement on Ukraine on 19 May, the EBRD and the participating DFIs have agreed on how they can work together to contribute to the reconstruction of Ukraine. The "EBRD-G7-DFI-EDFI Ukraine Investment Platform" will aim to promote co-financing between participating institutions by strengthening cooperation focusing primarily on the private sector in Ukraine.

Support to Ukraine, both military, humanitarian and financial, is a priority for the Swedish government.

The EBRD is the largest institutional investor in Ukraine and therefore has a clear and important role in the country. Given its expertise, relationships, and operational experience in the region, it will serve as the leading co-investment institution within the framework of the newly established investment platform.

The agreement will facilitate the reconstruction of Ukraine in several ways:

• Increased investment capacity, building on EBRD’s experience, skills and relationships in Ukraine, enabling investment of DFIs that otherwise would not be able to participate at the same scale in the reconstruction due to their operational capacity, size or lack of experience in the country.
• Simplified process for the Ukrainian counterparts, which will face serious capacity bottlenecks (including project preparation and implementation) given the expected huge volume of investment flow during reconstruction. With the Platform, the Ukrainian counterparties will only have to negotiate with the lead institution, resulting in expedited investment and decision-making processes, while mobilising a group of DFIs. The EBRD will act as the lead manager of the co-investment, structuring, coordinating all due diligence, negotiation and signing of all financing documents and finally the disbursement.
• Increased leverage and coordinated action. In particular in areas such as promotion of privatization and commercialization of state-owned enterprises and establishment of a transparent privatization process; promotion of competition, fostering good governance and level playing field in the private sector; improvement of the regulatory and legal environment and introduction of strong incentives for attracting investments in the private sector.

The partners, in close consultation with their respective governments, will promote measures to address the major financial needs for reconstruction, in particular through cooperation with the private sector. The objective is to contribute to the recovery of the economy, industry and infrastructure and the reconstruction of people's livelihoods in Ukraine, as well as the stability of the international community.

G7 background

This agreement was signed on the 21^st of June, during a conference for the reconstruction of Ukraine in London. It is also a realisation of what was announced at the G7 summit in Tokyo last month. From the EBRD, the G7 DFIs and a large number of other DFIs, a so-called "EBRD-G7 DFI-EDFI Ukraine Investment Platform" is now being established. The total number of participants is 18, including Swedfund.

Signatories of the MoU

• EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
• BRITISH INTERNATIONAL INVESTMENT PLC
• CASSA DEPOSITI E PRESTITI S.P.A.
• DEG - DEUTSCHE INVESTITIONS- UND ENTWICKLUNGSGESELLSCHAFT MBH
• JAPAN BANK FOR INTERNATIONAL COOPERATION
• JAPAN INTERNATIONAL COOPERATION AGENCY
• SOCIETE DE PROMOTION ET DE PARTICIPATION POUR LA COOPERATION ECONOMIQUE S.A.
• UNITED STATES INTERNATIONAL DEVELOPMENT FINANCE CORPORATION
• BELGIAN INVESTMENT COMPANY FOR DEVELOPING COUNTRIES S.A.
• COMPAÑÍA ESPAÑOLA DE FINANCIACIÓN DEL DESARROLLO, COFIDES, S.A., S.M.E.
• FINNFUND
• INVESTMENT FUND FOR DEVELOPING COUNTRIES
• NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR ONTWIKKELINGSLANDEN N.V.
• NORFUND
• OESTERREICHISCHE ENTWICKLUNGSBANK AG
• SOCIEDADE PARA O FINANCIAMENTO DO DESENVOLVIMENTO, INSTITUICAO FINANCEIRA DE CREDITO, SA
• SWISS INVESTMENT FUND FOR EMERGING MARKETS AG
• SWEDFUND INTERNATIONAL AB