BlackRock, JPMorgan and McKinsey working on Ukraine reconstruction bank

18 August 2023 Consultancy.eu 3 min. read

Having been ravaged by war since the invasion of Russian troops in 2022, estimates suggest it will take Ukraine more than $400 billion to rebuild. To provide a solution for this huge funding gap, global asset manager BlackRock, banking giant JP Morgan and management consulting firm McKinsey & Company are working with the country to establish a "fund of reconstruction”, and attract billions more in private investment.

After the Russian military’s invasion of Ukraine commenced in early 2022, the World Bank predicted it could take at least $411 billion to rebuild Ukraine and its economy after the war. With the recent launch of a Ukrainian counter-offensive, this sum is likely to increase further, as the conflict escalates once more.

In anticipation of this, Ukraine has reached out to some of the largest financial and professional services firms of its ally, the US. The government of President Volodymyr Zelensky has announced it has called upon the consulting branches of BlackRoack and JPMorgan Chase, as well as the strategists of McKinsey & Company, to help set up a “fund of reconstruction”.

BlackRock, JPMorgan and McKinsey working on Ukraine reconstruction bank

According to reports from the Financial Times, the three companies will have to work together with the aim of guiding public capital in a direction that would attract billions more in private investment.

“The notion is that this initial seed capital would be a de-risking mechanism, and it would create the potential for private sector capital to come in at scale,” said Brandon Hall, co-head of BlackRock’s Financial Markets Advisory arm. “Ukraine will have its own organisation to source and syndicate these local investment opportunities.”

Founded in 1988, initially as an enterprise risk management and fixed income institutional asset manager, BlackRock is the world's largest asset manager, with $8.59 trillion in assets under management as of the end of 2022. JPMorgan, meanwhile, was brought in partly for its debt expertise – and has helped Ukraine in this way before, having enabled the country to repay more than $25 billion of sovereign debt since 2010, and to restructure its debt to the tune of $20 billion in 2022.

“The fund is being set up to also give public and private sector investors the opportunity to invest into specific projects and sectors,” said Stefan Weiler, JPMorgan’s head of debt capital markets for central Europe, Middle East and Africa. “There will be different sectoral funds that the fund identified as priorities for Ukraine. The aim is maximise capital participation.”

McKinsey’s exact role in the engagement is unclear. The firm did not respond to a request for comment when contacted by the Financial Times – which first broke the story. However, the firm has been at the forefront of the consulting industry’s response to the war over the last year.

Along with Bain & Company and Boston Consulting Group, the firm announced it was barring work for the Russian government and its allies, days after the invasion of Ukraine.