The International Finance Corporation, a member of the World Bank Group, will issue $250 million in debt to Myronivsky Hliboproduct (MHP), a leading Ukraine poultry producer, in IFC’s largest Ukrainian investment since 2008. The capital will be used to expand MHP’s operations in the wake of economic difficulties in Ukraine.
“We are stepping up our efforts to support Ukrainian companies and help the country realise its competitive advantages and return to economic growth. This financing for MHP is our largest investment in Ukraine’s agribusiness sector,” wrote Rufat Alimardanov, IFC regional head for Ukraine and Belarus, in the press release.
Despite the political and resulting economic difficulties affecting Ukraine, some investment figures are optimistic about agri investment prospects in the country. The Association Agreement with EU has been tipped as a way to improve the investment situation in Ukraine.
“The Association Agreement may force the Ukrainian government to make the investment environment more favourable. Ukraine will have more access to EU markets and also [the Agreement] could [raise] investors’ expectations of Ukraine,” said Oleg Ustenko, executive director of the Bleyzer Foundation.
He commented that while the political situation is not causing investors to cease projects in the country, it is a challenge to attract new investors. However, changes in legislation could reverse that trend. “The most important issues are linked to [foreign] land lease, and ownership of private land,” he said. “My hunch is that in the next couple of months, one of the key land lease laws will be amended.”
“There’s a rumour that [foreign lease permissions] will be upped to 49 years – this may attract more foreign investment,” he added.
IFC’s own balance sheet provided $100 million in debt and $75 million was channeled through the the IFC Managed Co-Lending Portfolio Program – an institutional investor-funded platform offering passive exposure to IFC’s future senior loan portfolio.
The remaining $75 million is being raised in syndicated loans from other lenders.
The agriculture sector represents over 40 percent of IFC’s current investment portfolio in the country.