• New instrument to mobilise private investment in the reconstruction of Ukraine
• Fund to grow to a target volume of EUR 1 billion by the end of 2027
• Enables investments of up to EUR 6 to 7 billion in the Ukrainian economy

Together with European partners, KfW has launched the European Flagship Fund for the Reconstruction of Ukraine on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission. KfW subscribed for shares in the new fund for the first time today as part of the Ukraine Recovery Conference in Gdansk. The European consortium is made up of the governments of Germany, Italy, Poland and France, their development banks, the European Commission, and the European Investment Bank (EIB). Development Minister Reem Alabali Radovan attended the signing ceremony on behalf of Germany.

Development Minister Alabali Radovan:

“Germany is a lead initiator of the European Recovery Fund. Together, we are committed to reforms, resilience, reconstruction and the future. The reconstruction of Ukraine requires not only public funds but also private investment. This cooperation is a boon for Ukraine’s European future, as well as for Germany and Europe: a strong Ukraine also benefits us, our economy and our security.”

The fund aims to mobilise capital from public promotional banks and private investors for the reconstruction of Ukraine and to invest directly in private projects in strategic sectors of the Ukrainian economy. Among other things, the focus is on the reconstruction of energy infrastructure, the expansion of renewable energies, industrial production facilities and digital infrastructure such as data centres.

The fund was set up by a consortium of fund managers from Amber Infrastructure in the United Kingdom and Dragon Capital, a leading Ukrainian private equity management company. Both had previously come out on top in a Europe-wide selection process.

“The reconstruction creates concrete investment opportunities – for example in the areas of energy infrastructure, renewables, digital infrastructure, industrial machinery as well as transport and logistics. These are areas in which both German and European companies can make important contributions. The fund helps to facilitate private investment in Ukraine and at the same time further deepen economic links between Ukraine and Europe,”

said Christiane Laibach, KfW Executive Board Member for International Financing.

“A stable and economically resilient Ukraine is also a key factor for the European security architecture. With the new fund, together with our European partners, we are creating an instrument that uses public funds in a targeted manner to mobilise private capital for reconstruction,”

she continued.

The World Bank estimates the cost of reconstructing Ukraine at USD 524 billion. An amount on this scale can only be raised together with private investors. This is precisely where the new fund comes in. Public donors provide capital for a so-called first loss tranche and thus mitigate the risks for private investors.

Together, the public donors contribute up to EUR 220 million to this risk buffer. This amount includes EUR 15 million each from Germany, Italy, France and Poland via their promotional banks. The EU will contribute further funds to the fund via the EIB, KfW and the Italian promotional bank Cassa Depositi e Prestiti (CDP).

On this basis, the fund aims to raise further capital from private investors. The planned target size is EUR 1 billion by the end of 2027. As an anchor investor, the fund provides equity for project companies and businesses, thus enabling them to raise further equity and debt capital at project level. With a fund volume of EUR 1 billion, investments of around EUR 6 to 7 billion can subsequently be achieved according to current planning.

The fund is expected to begin its investment activities later this year. KfW is contributing its many years of experience in structuring risk capital and first loss tranches. It is one of the world’s largest investors in first loss tranches.

The fund is part of KfW’s broader commitment to stabilising and reconstructing Ukraine. Further projects are being pursued during the Ukraine Recovery Conference. One of them is the further development of the Ukrainian National Development Institution, a long-term KfW partner that is expected to play a larger role in financing reconstruction and promoting small and medium enterprises in the future.

Meanwhile, private-sector investment in Ukraine is supported through DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH, a subsidiary of KfW Group. During the conference, around EUR 13.5 million from the UkraineConnect programme was committed to three additional business projects. These include an investment by GOLDBECK SOLAR, a German family-owned company in the renewable energy sector, in hybrid solar parks with battery storage. The project is intended to help stabilise, further decarbonise and decentralise Ukraine’s energy supply.

UkraineConnect is implemented jointly by the Federal Ministry for Economic Affairs and Energy (BMWE) and DEG and is financed from BMWE funds. The programme supports German and European companies in realising investments in Ukraine even under difficult conditions and complements existing instruments such as export credit and investment guarantees. Around six months after its launch, the BMWE announced that it would increase funding for UkraineConnect by around EUR 38 million.

In addition, further agreements in key areas such as energy supply and healthcare will be concluded at the conference.

Additional agreements are also being concluded in key areas such as energy supply and health. These include, among others, a grant agreement with the Ukrainian grid operator Ukrenergo, a joint energy sector project with the German Federal Ministry for Economic Affairs and Energy and the EBRD, a project on women’s health with the Ukrainian Ministry of Health and a contribution to the World Bank’s Ukraine Relief, Recovery, Reconstruction and Reform Trust Fund.

Further information on KfW's involvement in Ukraine can be found at:

For more resilience of the Ukraine | KfW Development Bank