KfW has launched a significant European fund for the reconstruction of Ukraine, as announced at the Ukraine Recovery Conference in Rome. Acting on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), KfW is serving as the lead arranger. The initiative involves a consortium that includes Germany, Italy, Poland, France, their development banks, the European Commission, and the European Investment Bank (EIB).
The fund aims to mobilize around EUR 1 billion from private investors to invest in strategic sectors of Ukraine's economy. These sectors include energy infrastructure reconstruction, expansion of wind and solar power to replace coal-fired plants, industrial production facilities, and digital infrastructure like data centers.
“With the new European fund for the reconstruction of Ukraine, KfW is sending a signal to private investors,” said Christiane Laibach, KfW Executive Board Member for International Financing. She emphasized that "the fund makes investment by private investors attractive even under wartime conditions and reduces their risk."
The World Bank estimates that reconstructing Ukraine will cost USD 524 billion. Laibach noted that this amount requires private investor participation.
KfW and other public donors are contributing up to EUR 220 million as financiers of the "first loss tranche" to mitigate risks for private investors. This contribution includes EUR 15 million each from Germany, Italy, France, and Poland through their promotional banks. The EIB will contribute EUR 100 million based on an EU guarantee with an additional EUR 60 million from EU grants added via KfW and Cassa dei Depositi e Prestiti (CDP).
The fund aims to raise further capital from private investors with a target of EUR 500 million by 2026. If conditions improve, this could increase to EUR 1 billion by 2027/2028.
As a lead investor providing equity, the fund is expected to enable project companies to attract more equity and debt capital at project level. With a volume of EUR 1 billion, it could facilitate investments totaling around EUR 6-7 billion.
A market sounding process will identify the best approach by late 2025 with initial investments anticipated in mid-2026.
KfW ranks among the largest global investors in first loss tranches.