BlackRock, JP Morgan set up 'reconstruction bank' for Ukraine

BlackRock and JPMorgan Chase are reportedly aiding the Ukrainian government in setting up a reconstruction bank that could see rebuilding projects being heavily invested in by private entities. The Financial Times noted that it would cost Ukraine roughly $411 billion to rebuild their country amid the onslaught of attacks by Russia, but the cost is continuing to increase.

The Ukraine Development Fund is still in the early stages of setting up the reconstruction bank, but potential investors will get an inside preview of how things will look during a London conference that is set to take place this week.

With the steep cost to rebuild, the Ukrainian government reached out to BlackRock in November to see if there was a conceivable way of attracting investments. JPMorgan was soon added in February. Ukrainian President Volodymyr Zelensky confirmed last month that he was working with the two financial institutions and consultants at McKinsey, per the report. 

Philipp Hildebrand, BlackRock vice-chair, said: “So many of today’s long-term challenges are best addressed through blended finance and this is one. You need these vehicles to mobilise capital at scale.”

Though BlackRock and JPMorgan are offering their services, they will likely have the first look at potential investments in the Eastern European country. The report noted that the current development has only deepened JPMorgan’s relationship with its long-standing client, Ukraine. The financial institution has helped Ukraine raise more than $25 billion in sovereign debt since 2010, and it led in the country’s $20 billion debt reconstruction in 2022.

BlackRock has claimed that Ukraine needs a “development finance bank” that would provide the country with infrastructure, climate, and agriculture opportunities. This will apparently make them more attractive to other long-term investors. JPMorgan was added to the venture due to its debt expertise.

Stefan Weiler, JPMorgan’s head of debt capital markets in Africa, Europe, and the Middle East, said: “The fund is being set up to also give public and private sector investors the opportunity to invest into specific projects and sectors.”

“There will be different sectoral funds that the fund identified as priorities for Ukraine. That aim is to maximise capital participation.” 

However, it does not appear that Ukraine is expected to receive such investments until the end of the conflict with Russia. 

Russian President Vladimir Putin, during a meeting with the African Union, revealed that Ukraine had allegedly signed a treaty in the spring of 2022. But the country went back on it after Russia had agreed to the terms.

Image: Title: zelensky black rock jp