Three international organizations join forces to provide $480 million to strengthen Ukraine's agribusiness, boost global food security
Financing will help leading food producer MHP sustain operations, reduce carbon footprint
IFC provides $130 million; EBRD provides $100 million; DFC provides $250 million
Kyiv, Ukraine, October 20, 2023—To strengthen food security amid Russia's invasion of Ukraine, IFC, the European Bank for Reconstruction and Development (EBRD), and the United States' International Development Finance Corporation (DFC) are providing a $480 million financing package to leading Ukrainian agribusiness group MHP. The funding will help the company maintain its operations and boost its sustainable power generation capacity, reducing its carbon footprint.
Ukraine's agribusinesses have suffered damages of up to $8.8 billion since February 2022, according to the Kyiv School of Economics, including destruction and damage to agricultural machinery, granaries, and manufactured goods. The sector is also facing increased production costs, energy shortages, a decline in production of crops and livestock, and logistical problems. To remain operational and ensure stable production, access to financing is critical.
IFC's funding includes a $30 million loan to upgrade and expand MHP's agricultural waste-to-energy facility. That will substantially increase the company's green power generation capacity, which is expected to reduce its carbon footprint. Prior to the investment, IFC also advised MHP on how to align with IFC's Performance Standards, which are widely considered the international benchmark for sustainable development. IFC is extending additional $100 million loan to help MHP enhance its financial stability by refinancing its Notes due in May 2024.
IFC's financing is backed by a first-loss guarantees from the United Kingdom acting through its Foreign, Commonwealth & Development Office, the IFC Canada Facility for Resilient Food Systems, and other sources of blended concessional finance, further strengthening agribusiness and energy security in the country.
The EBRD is lending $100 million to support MHP to sustain its financial resilience through the refinancing of its Eurobonds at a time of limited access to capital markets. The loan will be supported by a guarantee from Spain, as well as credit support from the EBRD Crisis Response Special Fund (France, Canada, Italy, Japan, Norway, Switzerland, the United Kingdom, Germany, Netherlands, Denmark and the USA) in line with the EBRD's resilience package in response to Russia's invasion of Ukraine. The project's legal due diligence is supported by Japan. As part of its cooperation with the EBRD, MHP has committed to strengthening its climate corporate governance via a technical assistance assignment funded by the Clean Technology Fund under the High Impact Programme.
DFC will provide a $250 million loan to MHP SE to support the Ukrainian poultry and grain producer's efforts to mitigate the effects of Russia's invasion of Ukraine. The funds will be used to refinance maturing debt and support the company's poultry and grain production. The loan would also support the company's ability to increase food production and storage and support its export capacity, while mitigating the devastating effects of food insecurity exacerbated by the war.
MHP is a leading international food and agrotech group, and Ukraine's largest producer of poultry, culinary, and processed meat products. The company employs more than 28,000 people in Ukraine and, despite experiencing disruptions in 2022, re-established supply and export routes to continue to export to more than 70 countries. In addition, MHP supports thousands of smaller businesses, including more than 2,000 small retail stores and 2,500 local farmers in Ukraine.
The EBRD's Managing Director for Eastern Europe and the Caucasus, Matteo Patrone, said: "Boosting production and securing the agricultural value chain is critical to ensuring food security, one of the EBRD's five investment priorities for Ukraine. As the country's biggest institutional investor, the Bank aims through lending to agribusiness clients to preserve jobs and keep the sector working effectively. This loan is very much in that spirit."
"Improving food security is a priority for DFC in Ukraine and across the globe," said DFC Chief Operating Officer Agnes Dasewicz. "A thriving Ukrainian agricultural sector is not only critical for sustaining the country but is equally important to global agricultural supply chains that have been disrupted by Russia's invasion of Ukraine. DFC is proud to provide crucial financing to support Ukraine's ability to supply global markets with essential staples that ensure the health and stability of many nations."
"The international community remains committed to supporting Ukraine's agribusiness sector, reinforcing its dedication to sustainability, and enhancing Ukraine's economic resilience through private sector financing," said Rana Karadsheh, IFC's Regional Director for Europe. "This investment underscores our longstanding partnership with MHP and our commitment to helping the country build back greener and better."
IFC's funding is part of its $2 billion Economic Resilience Action program, launched last year to preserve economic activity and job creation amid Russia's invasion of Ukraine. It also complements IBRD's program to support agriculture in the country, including support for essential logistics and to improved access to affordable financing for small farmers.
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
For more information about MHP, visit: www.mhp.com.ua
For more information about EBRD, visit: www.ebrd.com
For more information about DFC, visit: www.dfc.gov
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