<100 subscribers
BlackRock and JPMorgan Chase are reportedly collaborating with the Ukrainian government to establish a reconstruction bank that could attract significant private investment. According to the Financial Times, Ukraine needs to invest around $411 billion to rebuild the country following the Russian attacks, and the cost is still rising.
The Ukraine Development Fund is currently in the early stages of setting up the reconstruction bank, but potential investors will have a chance to preview the project during a London conference that is scheduled to take place soon.
BlackRock was approached by the Ukrainian government in November to explore the possibility of attracting investments, and JPMorgan was added to the project in February. Ukrainian President Volodymyr Zelensky confirmed last month that the two financial institutions, along with consultants at McKinsey, are working on the reconstruction bank.
Philipp Hildebrand, BlackRock's vice-chair, commented that "so many of today's long-term challenges are best addressed through blended finance and this is one. You need these vehicles to mobilize capital at scale." BlackRock has suggested the need for a "development finance bank" that would provide Ukraine with infrastructure, climate, and agriculture opportunities, making the country more attractive to other long-term investors. JPMorgan was added to the project due to its expertise in debt management.
Stefan Weiler, JPMorgan's head of debt capital markets in Africa, Europe, and the Middle East, stated that "the fund is being set up to also give public and private sector investors the opportunity to invest into specific projects. There will be different sectoral funds that the fund identified as priorities for Ukraine. That aim is to maximize capital participation."
However, it appears that Ukraine may not receive these investments until the conflict with Russia is resolved. Russian President Vladimir Putin claimed during a meeting with the African Union that Ukraine had signed a treaty in the spring of 2022, but the country went back on it after Russia had agreed to the terms.
It is worth noting that BlackRock and JPMorgan's involvement in the reconstruction bank may deepen their relationship with Ukraine. JPMorgan has helped Ukraine raise over $25 billion in sovereign debt since 2010, and it led the country's $20 billion debt reconstruction in 2022.
In conclusion, the reconstruction bank being set up by BlackRock and JPMorgan for Ukraine has the potential to attract significant private investment. However, the country may have to wait until the conflict with Russia is resolved before receiving these investments. It remains to be seen how this project will develop, but it is clear that BlackRock and JPMorgan's involvement could have significant implications for Ukraine's economic future.
Sources:
Financial Times: https://www.ft.com/content/4f5dcb2e-6a2c-4d9c-8d2c-2c0c1a2a4d3b
Kurt Warner
