The European Fund for Southeast Europe (EFSE), advised by Finance in Motion, is launching a dedicated blended finance investment vehicle, the Ukraine Sub-Fund (USF), to contribute to the recovery and reconstruction of Ukraine. "Following the German government's EUR 50 million investment in December 2023, the EU, another anchor investor in EFSE, has announced an additional EUR 55 million to the USF during the Ukraine Recovery Conference held on June 11 and 12 in Berlin," says Sylvia Wisniwski, Managing Director at Finance in Motion.
EFSE has been active in Ukraine for over 10 years facilitating loans in total volumes of more than 360 million euros to more than 3.500 Ukrainian business as well as a further 4.5 million euros in technical assistance and small business grants. EFSE has been one of the key local currency debt providers to the financial sector in Ukraine with nearly 90% of facilitated MSME financing being in local currency.
The new sub-fund will leverage on existing EFSE’s experience and relationships in the Ukrainian financial sector to deliver tailored local currency financing solutions for MSMEs. This is the most important starting point for strengthening Ukraine’s economy and making it resilient.
"The dedicated sub-fund allows EFSE to play an active role in Ukraine even in exceptionally challenging times. With over 100 million in first-loss capital, the sub-fund provides an excellent platform to attract additional institutional investors interested in investing in Ukraine’s recovery and reconstruction," says Andrea Hagmann, EFSE Board Chairperson.
The war has not only caused a great deal of suffering in Ukraine. 3.7 million people were displaced, businesses destroyed or restricted and assets, infrastructure and jobs destroyed. The cost of Ukraine’s reconstruction and recovery is already estimated at 452.8 billion euros, while the war is still ongoing and causing new damage. Micro, small and medium-sized enterprises, which form the backbone of the economy, are facing significant costs for resettlement, restructuring and adaptation, while access to finance, especially in local currency, is severely restricted. “This is where the fund comes in,” says Hagmann.
About EFSE
An impact investment fund established in 2005, the European Fund for Southeast Europe (EFSE) aims to foster economic development and prosperity in Southeast Europe and the Eastern Neighbourhood Region by investing in the success of micro and small enterprises as well as improved living conditions for private households. As access to financial services is key to developing this segment, EFSE focuses on helping local financial sectors strengthen their ability to provide responsible financing for this target group. Alongside its investment activities through local partners, EFSE multiplies its impact through the EFSE Development Facility, which provides technical assistance, training, and other nonfinancial support to entrepreneurs and institutions. The fund’s impact management system, through its advisor Finance in Motion, underwent an independent verification by impact auditor BlueMark affirming strong Operating Principles for Impact Management alignment in 2021. EFSE was initiated by KfW Development Bank with the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission. As the first public-private partnership of its kind, EFSE draws its capital from donor agencies, international financial institutions, and private institutional investors.
Finance in Motion GmbH, Germany, serves as EFSE’s advisor and Hauck & Aufhäuser Fund Services S.A., Luxembourg, acts as manager. For more information on the European Fund for Southeast Europe, please visit: www.efse.lu
For more information on Finance in Motion, please visit: www.finance-in-motion.com
About Finance in Motion
Finance in Motion, Germany serves as EFSE’s advisor and is a global impact asset manager focused exclusively on sustainable development in emerging markets and developing economies. The company structures, manages, and advises impact investment funds that bring together public and private investors to address climate change, strengthen biodiversity conservation, foster the sustainable use of natural resources, improve livelihoods, and promote economic opportunities. EFSE’s impact is managed in line with the industry standard Operating Principles for Impact Management, also demonstrated by the strong results of the latest independent verification of the advisor’s impact management practices in 2023.
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