Natural resources, agribusiness and financial sectors attracted most financing
In 2015 the European Bank for Reconstruction and Development (EBRD) signed 30 transactions in Ukraine totalling €1 billion. This was a strong performance in a challenging macro-economic environment that prevailed throughout the year when Ukraine’s GDP contracted significantly and there was little appetite for new investments, both from domestic and foreign investors.
The EBRD’s financial sector funding reached €387 million, including €100 million for trade facilitation transactions; the energy sector’s portion was €283 million and agribusiness was €184 million. The manufacturing and services sectors received €87 million and infrastructure €56 million.
The largest deal was a US$ 300 million loan to Ukraine’s national gas and oil company Naftogaz for purchases of natural gas on the European market to fill storage facilities for the winter heating period. This was a landmark transaction for the country and the sector, not only in terms of its energy security but also because it set conditions for transparent procurement and enhanced corporate governance in an unprecedented way in Ukraine.
Significant investments were made in the agribusiness sector with a number of blue chip companies like Nibulon, Kernel and Mironovskij Hliboprobuct (MHP) but also with smaller enterprises, including companies with export potential. The small and medium-sized enterprise (SME) sector received a new impetus with the establishment of a dedicated team in Ukraine to provide direct financing and support to SMEs across the country. The Bank re-engaged in the IT sector through an equity investment in an online digital imagery company. Financing for the manufacturing sector also picked up in volume with three transactions.
The EBRD was very active in the banking sector through several equity transactions and its Trade Facilitation Programme. The Bank participated in capital increases in Megabank (15 per cent stake), Ukrsibbank-BNP Paribas (increasing its stake to 40 per cent) and the acquisition of a 30 per cent stake in Raiffeisenbank Aval. These investments will strengthen the capital base of these institutions and thus enhance their ability to increase financing to Ukrainian enterprises.
The EBRD remained active in the municipal sector as in previous years and signed five projects (involving district heating, transport and traffic regulation) in as many cities (Lviv, Odesa, Chernivtsi, Vinnytsya and Cherkasy). Infrastructure investments for enhancing the handling capacity and auxiliary services at the country’s Black Sea ports also continued.
The Bank’s policy dialogue effort in various sectors, ranging from agribusiness and banking to energy, has been extensive and highly successful in underpinning its investments and helping to solidify Ukraine’s overall economic reform progress. The Bank used its own funds and helped secure donor funding to provide financial support for important undertakings such as the Ukraine Business Ombudsman Council and the National Reforms Council.
Significant resources were committed to support the state-owned enterprises (SOE) reform initiatives and the privatisation process in close cooperation with the Ministry of Economic Development and Trade and the State Property Fund of Ukraine.
The EBRD is the largest international financial investor in Ukraine. As of 1 January 2016, the Bank had a total cumulative commitment of approximately €12 billion in 355 projects throughout the country.