{"id":250679,"date":"2025-11-08T05:33:09","date_gmt":"2025-11-08T05:33:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/250679\/"},"modified":"2025-11-08T05:33:09","modified_gmt":"2025-11-08T05:33:09","slug":"this-investment-fund-is-betting-on-ukraines-struggling-farm-sector","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/250679\/","title":{"rendered":"This investment fund is betting on Ukraine’s struggling farm sector"},"content":{"rendered":"

Get more news like this directly to your inbox every week by subscribing to our Ukraine Business Roundup newsletter<\/a>.<\/p>\n

Russia’s full-scale invasion has hit Ukraine’s agriculture sector in every conceivable way \u2014 from blocked ports and occupied farmland to grain theft, trade disruptions, and direct attacks.<\/p>\n

But even as the sector struggles, Ukraine has become more dependent on it than ever before. With exports of metals<\/a>, mining, and other key industries shrinking due to the war, agriculture and agrifood now account for more than half of Ukraine’s annual exports<\/a> and around 60% of foreign currency revenue, up from 44% in 2021, central bank data shows.<\/p>\n

That growing dependence is both a lifeline for Ukraine’s economy<\/a> but also proof of its fragility as it’s forced to rely on a sector that is exposed to so many risks.<\/p>\n

Meanwhile, access to finance has dried up. Commercial banks have all but left the market, wary of the risks, leaving agribusinesses with no access to credit. Investment has been limited to domestic agricultural giants and international financial institutions focused on firms with large export capacity, where food security considerations justify lending.<\/p>\n

That grim picture brightens a little with news of an investment fund recently launched that is aiming to fill financing gaps and get much-needed capital back into the sector, particularly to medium-sized businesses. <\/p>\n

Ukraine-based Diligent Capital Partners and Dutch firm 2ndAries recently launched a 150-million-euro fund backed by the EU’s Ukraine Investment Framework<\/a>, offering both debt and equity to agrifood companies.<\/p>\n

According to Dan Yakub, founding partner at Diligent Capital Partners, Ukraine’s largest agricultural firms account for about 20% of export revenue. “The rest are smaller enterprises \u2014 so the opportunity is large,” he told the Kyiv Independent in an interview. <\/p>\n

Yakub said the fund expects to start deploying capital by the end of the first quarter of next year. Its current pipeline already stands at 500 million euros, he added, “and interest keeps growing.”<\/p>\n

The Kyiv Independent spoke with Yakub to discuss why he and his partners launched the fund now, the opportunities they see in Ukraine’s agricultural sector amid the war, and their long-term vision for the country’s agrifood industry.<\/p>\n

This interview has been edited for clarity.<\/p>\n

The Kyiv Independent: What prompted you guys to go into this investment together (with the Dutch firm) and create this fund? And why now?<\/p>\n

Dan Yakub: First of all, the war. Many companies we had invested in were completely shut off from financing \u2014 debt or equity. There wasn\u2019t an opportunity for companies to keep going. The lifeblood of business, loans or equity capital, wasn\u2019t there.<\/p>\n

During the war, it\u2019s difficult to get into valuation conversations with companies. Sometimes it\u2019s even offensive to entrepreneurs. So we thought there needs to be an instrument offering financing somewhere between debt and equity, where we don\u2019t have to start with valuation.<\/p>\n

And finally, our expertise in food and agribusiness. We\u2019ve done a lot of deals in Ukraine \u2014 confectionery, juices, cheese, milk, wine, seeds, export infrastructure, animal feed, pet food.<\/p>\n

Our Dutch partners were part of FMO (the Dutch Entrepreneurial Development Bank), probably the largest frontier, risky-places food and agribusiness player in the world. So we thought, we have this expertise, we should focus on the most cash-generative part of the Ukrainian economy, during the war.<\/p>\n

The Kyiv Independent: Why did you and your partners decide to go with this particular financing tool for the investment?<\/p>\n

Dan Yakub: It\u2019s both for investors coming into Ukraine and for Ukrainian companies. For investors, the key is that it needs to be a partnership with a European country. That\u2019s essential because most EU financing decisions happen at a government-to-government level.<\/p>\n

Number two: flexibility. We can structure it as debt or as a mix of debt and equity. When we share in the upside, we become aligned with the entrepreneur.<\/p>\n

Number three: speed. We\u2019re based in Ukraine, so decisions won\u2019t be made in London or the Netherlands. The core team is in Kyiv. People who understand the context, risks, and opportunities are making decisions here, which makes the fund more nimble and responsive.<\/p>\n

The Kyiv Independent: Why Europe?<\/p>\n

Dan Yakub: Europe is the (part of the world) most interested in Ukraine winning and being successful. Ukraine\u2019s success matters most to Europe. Only European countries can access European financing, and only they understand how the European Commission works.<\/p>\n

Also, many European countries have become successful in agribusiness. The Netherlands, for example, moved up the value chain \u2014 from commodities exports to finished goods and processing. That experience is important for Ukraine.<\/p>\n

The Kyiv Independent: How will you ensure the investments end up where they\u2019re intended to go?<\/p>\n

Dan Yakub: There are multiple layers. First, the European Commission guarantees the investments. There will also be other reputable institutional investors. All of them care that this is a successful and safe investment.<\/p>\n

It\u2019s food and agribusiness \u2014 traditionally a non-monopolized or lightly monopolized sector. We\u2019re focusing on medium-sized businesses with investments of 10\u201315 million euros. These are Ukrainian entrepreneurs who built their businesses from the ground up. They\u2019re not politically exposed.<\/p>\n

Second, partner risk. Who are we interfacing with? And here, once again, it’s more of our bread and butter to understand who we’re dealing with person-wise. We think, okay, we have this entrepreneur \u2014 they probably would have been in the market for some time, have dealt with multiple people, be it banks, development banks like the EBRD<\/a> or IFC.<\/p>\n

Finally, due diligence \u2014 legal and reputational. Ukraine has open registers now, so much can be done from your desk before hiring a law firm.<\/p>\n

The Kyiv Independent: Realistically, how large is the pool of companies that are ready for investment through this fund?<\/p>\n

Dan Yakub: More than half of Ukraine\u2019s export revenue \u2014 about 60% \u2014 is from food and agribusiness. Large companies like Astarta, Nibulon, MHP, and Kernel make up maybe 20% of that. The rest are smaller enterprises. So the opportunity is large.<\/p>\n

Some companies aren\u2019t ready due to structural issues \u2014 accounting, unpaid taxes, or legal problems \u2014 but overall, the pipeline is big. Even before announcing the fund, we had a pipeline three times the fund\u2019s size, around 500 million euros. And interest keeps growing.<\/p>\n

The Kyiv Independent: What kinds of companies are you looking at?<\/p>\n

Dan Yakub: The entire value chain. There are pure-play processors, integrated enterprises with farming, storage, and processing, and logistics companies in strategic locations. There\u2019s also specialized or organic farming.<\/p>\n

Ideally, we want value-added products \u2014 not just farming. Farming is volatile. One year can be good, another tough. That doesn’t mean we won’t look at farming businesses at all, but we will be more selective.<\/p>\n

The Kyiv Independent: At least 20% of funding will go to green projects. What might that look like?<\/p>\n

Dan Yakub: Organic farming using organic fertilizers, or processing waste \u2014 like turning waste protein into rendered protein, or waste from egg production into biomethane. Biomethane is especially relevant in Ukraine now, and there\u2019s strong EU demand for it.<\/p>\n

The Kyiv Independent: Is 20% realistic during the war?<\/p>\n

Dan Yakub: Definitely. For example, solar panels at agricultural enterprises could be purchased with the use of our funds, which are becoming significantly cheaper with battery technology \u2014 also fast growing in Ukraine. Companies want energy independence \u2014 solar and battery inthe \u00a0summer. Decentralizing energy is crucial now.<\/p>\n

The Kyiv Independent: You mentioned wanting capital working in the field within months. How soon do you expect the first projects to be funded?<\/p>\n

Dan Yakub: Realistically, by the end of the first quarter next year. There\u2019s preparatory work \u2014 collecting information, agreeing on terms, due diligence \u2014 so it takes a few months.<\/p>\n

The Kyiv Independent: And how long is the investment horizon?<\/p>\n

Dan Yakub: Long-term. Up to ten years. Some projects are complex and take time to generate cash flow. We\u2019re happy to wait longer than banks for principal repayment.<\/p>\n

The Kyiv Independent: What\u2019s the incentive for investors?<\/p>\n

Dan Yakub: Their investments are guaranteed by the European Commission, which provides a backstop. Returns are relatively fixed \u2014 more like fixed income. Some investors are doing this partly to help Ukraine.<\/p>\n

The Kyiv Independent: How do you measure success?<\/p>\n

Dan Yakub: Making investments that yield maybe low- to mid-teens returns for investors, which would be a success regionally.<\/p>\n

The Kyiv Independent: What could stand in the way?<\/p>\n

Dan Yakub: War risks \u2014 like if Odesa port becomes inoperable. It’s not even just the missile attacks, it’s more that it’s a very concentrated piece of sea that needs to be open for things to move in food and agribusiness.<\/p>\n

A very rapid return to normal could also bring too much capital and competition. That\u2019s a good problem to have, but it would make deals more expensive. Finally, human capacity \u2014 finding people focused on Ukraine, service providers \u2014 an outflow of those types of people or people getting tired, that would also be a risk.<\/p>\n

The Kyiv Independent: What is your vision for Ukraine\u2019s agricultural sector in the next five to ten years? And how do you view your fund’s role in shaping it?<\/p>\n

Dan Yakub: In five years, gradual change; in ten, transformation. It\u2019ll be capital-intensive, not labor-intensive. We\u2019ll move deeper into finished products \u2014 starch, processed fruits and vegetables, substituting imports.<\/p>\n

The future is in capital-intensive projects: processing, logistics, and branded products. Ukrainian companies can succeed in global and European markets with branded products. That’s where we want to be \u2014 to make (the sector) more, \u201cfancy,\u201d so to speak. Competing only on cost and volume will be politically sensitive in Europe.<\/p>\n

The Kyiv Independent: Right, when people are attached to brands, it\u2019s harder politically to block them.<\/p>\n

Dan Yakub: Exactly. Brands are about what people want.<\/p>\n

<\/p>\n

Ukraine must look beyond the EU for its agricultural future<\/p>\n

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