The Overseas Private Investment Corporation (OPIC), the US development finance institution, met with the Ukrainian Ministry of Agricultural Policy and Food on Monday to re-affirm its commitment to private investment in the country’s agri sector.
Charles Stadtlander, a spokesperson for OPIC told Agri Investor that US-backed investment into Ukraine’s agri sector promotes the tremendous potential for both economic growth and regional stability.
OPIC mobilises private sector capital to help solve development issues and advance US foreign policy at the same time, according to its website. It also works to help US businesses gain footholds in emerging markets through providing financial products such as loans and guarantees, political risk insurance and support for investment funds.
OPIC currently has a few investments in the sector, but at least one director believes this should increase. “There should be more ag deals than what we currently have in the portfolio,” said John Didiuk, an OPIC director of project finance and attendee at Monday’s meeting. “There is a huge potential in Ukrainian agriculture but there’s a lack of investments to increase the yield. We want to work with the government to make sure it’s an investor-friendly environment.”
The first investment OPIC made in the sector was a $25 million loan to Astarta-Kyiv LLC, a Ukrainian agriculture and machinery and equipment company, in December 2011 for the improvement of sugar plants and the development of industrial infrastructure, according to loan records. Potential developmental effects included increasing the company’s sugar output, which would lower sugar prices within the host country.
OPIC committed up to $500 million in senior debt to five renewable resources private equity funds in July 2011 including a $100 million commitment to Phatisa’s African Agriculture Fund and a $150 million commitment to SilverStreet Capital’s Silverlands Fund.
In 2012 a $25 million OPIC-backed loan from Citibank was provided to Kernel Group, one of the largest agricultural groups in Ukraine. Kernel used the loan to build a grain silo network in the Kirovograd and Cherkassy regions. The project was expected to result in higher revenues and tax payments to the state budget and to create between 180 and 200 jobs, according to a release from US-Ukraine Business Council.
European DFI, the European Bank for Reconstruction and Development, has also issued support for Ukraine’s agri sector in recent months.