At President Volodymyr Zelensky’s request, the Ukrainian government has set up a state-owned fund with an authorized capital of Hr 100 million ($3.6 million).
According to its statute, approved on April 2, the goal of the fund is “to create favorable conditions for implementing large-scale investment and socially-important projects.”
The fund will get money from various sources, including bank credits, donations, capital investments and subsidies from the state budget.
Zelensky and Prime Minister Denys Shmyhal have high expectations for the fund, saying that “it will improve Ukraine’s investment image.”
However, neither the government nor the fund’s statute clarified who can benefit and how.
According to Olga Magaletska, head of the office at the Ukrainian National Investment Council, the fund will help Ukrainian state-owned companies go public and sell their shares to foreign investors.
In an interview with Interfax news agency on March 1, Magaletska said that Ukrainian companies can give a percent of their shares to the fund. Asset managers will then be competitively selected from among international firms like Morgan Stanley or Franklin Templeton, to improve corporate governance and prepare the companies for initial public offerings.
The Ministry of Economy must draft the necessary legislation for the fund within the month, the Cabinet of Ministers resolved on March 31.
There are over 91 similar funds around the globe with $8.2 trillion in assets. The biggest funds are in Norway, China, Singapore, Kuwait and the United Arab Emirates (UAE).
Magaletska said the Ukrainian fund will be similar to Romania’s Fondul Proprietatea — a joint-stock company established by the government in 2005. It is now a private fund that is no longer financed from the state budget.
According to Magaletska, this model helped Romania’s state-owned companies become more attractive and encouraged investors to put money into local public businesses, which she hopes to replicate in Ukraine.
Eventually, it will help Ukraine revive its stock market, which has been struggling from lack of support and money for years, she added.
The fund will work with the UAE and Qatar on joint investment projects, Shmyhal said.
The launch of the national investment fund is one of Ukraine’s many attempts to lure international investors.
Earlier in December, the Ukrainian parliament passed an “investment nanny” bill that will increase state support for foreign investment projects.
The law will offer tax benefits to big investors and provide them with managers, the so-called “investment nannies,” who will help them communicate with state officials, provide advice and generally help them navigate the complicated world that is Ukrainian bureaucracy.
