BlackRock Registers $15 Billion Ukraine Development Fund in Luxembourg

BlackRock, the world’s largest asset manager, has announced the registration of the Ukraine Development Fund (UDF) in Luxembourg, with an initial commitment of $15 billion aimed at facilitating the reconstruction efforts in Ukraine.

This move comes amidst ongoing efforts to bolster the country’s economy in the aftermath of the Russian invasion.

According to a statement by BlackRock’s Vice President, Philip Gildbrand, investors plan to allocate a minimum of $15 billion towards Ukraine’s recovery.

Gildbrand further highlighted the intention of the Ukraine Development Fund to secure at least $500 million from countries, development banks, and other grantors, along with an additional $2 billion from private investors.

This concerted effort aims to pool resources from a consortium of shareholders and debt investors to finance reconstruction projects in Ukraine, amounting to a substantial $15 billion investment.

Recent assessments by the World Bank and other organisations have estimated the total funds required for Ukraine’s reconstruction post the extensive Russian aggression to be nearly $500 billion.

Gildbrand noted that the Ukraine Development Fund is likely to be registered in the international fund center of Luxembourg, equipped with an investment committee, analysts, and researchers.

The envisioned partnership seeks to establish one of the largest public-private initiatives in history, resembling entities such as Germany’s KfW, established after World War II, or the Climate Finance Partnership between BlackRock and several governments in 2021.

The fund’s priorities will encompass key sectors such as agriculture, industry, infrastructure, and energy. Currently, approximately 20 projects out of 200 evaluated have been identified for implementation.

Alongside the fund, a “project preparation centre” will be established to scout for investment-worthy ideas and ensure investor support for their realization.

The initiative underscores a collaborative effort between international financial institutions, private investors, and the Ukrainian government to foster sustainable development and economic stability in the region.

About UDF

The establishment of the Ukraine Development Fund (UDF) in collaboration with BlackRock and JPMorgan Chase responds to the urgent need for reconstruction in Ukraine following the ongoing conflict with Russia.

With estimates indicating a requirement of $500 billion for post-war reconstruction, the initiative aims to mobilise resources and expertise efficiently.

The planning phase of the UDF began with the engagement of BlackRock’s consulting arm by the Kyiv government in November 2022, followed by the enlistment of JPMorgan in February 2023 to enhance the fund’s capabilities, particularly in debt markets.

President Volodymyr Zelenskyy’s announcement of collaboration with BlackRock, JPMorgan, and McKinsey underscores the government’s determination to leverage international financial expertise for comprehensive reconstruction efforts.

The UDF intends to bridge the gap between public seed capital and private investment by creating an attractive investment environment in sectors such as infrastructure, climate, and agriculture.

This approach aligns with BlackRock’s recommendation for establishing a development finance bank to address investor concerns and facilitate capital inflow.

The involvement of BlackRock and JPMorgan, both renowned financial institutions, highlights their commitment to supporting Ukraine and potentially gaining early access to investment opportunities within the country.

Furthermore, their donation of services underscores a shared commitment to the UDF’s success and reinforces the longstanding relationship between JPMorgan and Ukraine in sovereign debt markets.

To address investor apprehensions regarding governance and transparency, the UDF plans to adopt a robust governance structure with representatives from international financial institutions and governments on its board.

Additionally, the fund will recruit investment professionals to execute its strategy effectively.

Drawing on BlackRock’s expertise from previous ventures such as the Saudi National Development Fund and the Climate Finance Partnership, the UDF aims to replicate successful blended finance models to attract investment into Ukraine’s reconstruction efforts.