Ukrainian PE & VC Summit 2025: Leverage, Multiplication and DFIs Panel Highlights

Today, our retrospective of the second Ukrainian PE & VC Summit features the panel about DFIs. Two questions were asked by Anna Wnuk to Michael Fiebig, Rodrigo Madrazo, Jane Niedra, and Aleksander Mokrzycki: How to mobilise private capital together with a public one in the reconstruction of Ukraine? Also, how to ensure the presence of investment in Ukraine is sustainable, and it’s not ad-hoc. Let’s find out.

European DFIs are state-owned institutions with an investment focus on the private sector, emerging markets and developing economies outside the European Union, with a current portfolio of around €53 bn.

At least 15 European DFIs have an interest in investing in Ukraine. Some of them have even received a specific envelope of money to do so (Finish Finnfund, Swedfund, Austrian OeEB, the Belgian BIO, and the others).

As of now, DFIs have around 60 deals in Ukraine, amounting to approximately €500 mln. They don’t see a liquidity problem when it comes to lending to mid-caps, nor a credit crunch, but the main concern is a scarcity of equity.

Today, most equity investments in Ukraine are backed by the governments or the European Commission, while the future challenge will be how to change it to private investors instead. Regulatory risks and capital control imposed by the Central Bank of Ukraine are also an issue. For example, it’s difficult to pay back the dividends.

What can we do? First, to create a joint ETF programme with the European Commission specifically for Ukraine, allowing the use of the guarantees to de-risk debt transactions. A survey was done to check the appetite of the European DFIs, and there is one indeed. The deal pipeline could count as high as €750 mln.

Interesting that the speakers put public money at the forefront of Ukraine's reconstruction, as private capital is too cautious to do so. The latter will be picky, preferring deals one by one, but if we need a huge amount of money for a wide range of projects, the public sector is a way to go.

For DFIs to step in and create a track record, they are asked to take a leap of faith instead of private investors, which is not going to happen, as they are way too conservative. Taking higher risks and accepting lower returns to make a road for private capital is a tough proposal. To mobilise such capital, you have to accept otherwise unacceptable risks.

But the guarantees with high coverage (FX risks included) and sharing tickets between DFIs should do the trick.

There are success cases, too. For example, good ownership, management, and transparency of a regional bank, Lviv in Western Ukraine, attracted such DFIs as responsAbility Investments in 2018, plus Scandinavian Nefco and Dutch Good Growth Fund later on. Although very small, the bank showed good returns.

Swiss DFI SIFEM, on the other hand, invested in Horizon Capital from its balance sheet without any guarantees. Despite all the risks, it was simply a great investment proposition. The challenge is, however, expanding on that, as there is a lack of top-notch managers with strong strategies who can withstand volatility.

Also, the Swedish government has allocated $80 mln towards investments in Ukraine. That’s why Swedfund International is setting up its office in Ukraine right now, focusing on energy and climate, financial inclusion, food, and agriculture.

It needs to be pointed out that although Ukraine has good assets, not all of them are good enough to be considered investment-grade.

The second Ukrainian PE & VC Summit was organised by UVCA in joint efforts with the Polish Private Equity & Venture Capital Association (PSIK), ICU Ventures, Google for Startups Warsaw and Rymarz Zdort Maruta. Technical partner — DreamX.