Amber Infrastructure Invests in Small Projects Amid Ukraine Conflict
Amber Infrastructure, in partnership with Dragon Capital, is investing in ready-to-build projects in Ukraine despite ongoing war challenges.
During an interview with Dominykas Tuckus, Managing Director and Ukraine Lead at Amber Infrastructure, the atmosphere in Kyiv was tense, marked by a yellow air raid warning signaling drone activity. Yet, this did not deter Amber from discussing its ambitious investment plans in the country.
Taking Steps Despite Adversity
Amber Infrastructure is one of the few foreign investment companies actively pursuing opportunities in Ukraine amidst the ongoing conflict. The firm recently teamed up with the nation’s largest investment firm, Dragon Capital, to create the Amber Dragon Ukraine Infrastructure Fund I, which achieved its initial close at €207 million ($231.8 million) on May 27.
This fund enjoys significant backing from reputed financial institutions. The European Bank for Reconstruction and Development (EBRD) has provided up to €60 million ($67.2 million), while the European Investment Bank has committed up to €50 million ($56 million). Additionally, the International Finance Corporation has allocated up to €40 million ($45 million) to support the fund, with an ambitious target of reaching €350 million ($390.4 million).
Joint Endeavours for Development
Another substantial initiative, the European Flagship Fund for the Reconstruction of Ukraine, also marked commitments of about €260 million ($291 million) on June 25. While its final size remains undefined, Tuckus explained that there’s potential for additional private capital to be brought in.
Several notable institutions, including the EIB, KfW Bank, and Italian Cassa Depositi e Prestiti, have signed on as initial investors in this project. Both funds focus on co-investing in the same opportunities, with Amber serving as the lead manager for these ventures, a strategy communicated by Tuckus during his discussions at the Kyiv International Economic Forum.
Long-term Vision for Investments
Amber Infrastructure aims to target projects with concrete revenue potential in sectors such as energy, transport, and digital infrastructure. Tuckus emphasized their interest in smaller, readily available projects that meet regulatory requirements and are ready for immediate construction. He highlighted the need for improved documentation and preparation among potential candidates to make investments bankable.
The company's goal is to establish “real assets” that can yield predictable cash flows. They anticipate holding onto these investments for approximately 10 to 15 years, ensuring that the capital can be returned to investors along with returns.
Current Projects and Future Prospects
While Amber has successfully raised billions, only one transaction had been reported at the time of the interview. They are, however, in advanced discussions regarding two additional projects. The first confirmed investment is Power One, led by Volodymyr Kudrytskiy, a former CEO of Ukrenergo. This project will install new energy systems across several sites in the Zakarpattia region, featuring a capacity of 36.8 megawatts (MW) and complemented by energy storage systems of 31.5 MW.
Tuckus pointed out the significant infrastructure voids within Ukraine, especially in areas like electricity and telecommunications, which have been exacerbated by ongoing hostilities. He mentioned that procuring war-risk insurance is crucial, yet he remains confident in available market options to mitigate these risks.
Despite the inherent challenges of investing in such a conflict-affected region, Tuckus maintains that entering the market at the right time can yield lucrative opportunities. He believes that perceptions of risk will evolve over time, similar to how other regions have transformed in response to changing circumstances.
As Ukraine navigates its recovery amidst adversities, Amber Infrastructure’s strategic planning and market insight portray a cautious yet optimistic path forward amid uncertain times.