Working alongside a development bank: what changes when the EBRD is in the deal

The largest institutional investor in Ukraine is a multilateral development bank. That single fact reorganises how commercial transactions here are structured, and any company planning significant activity should understand the mechanics rather than treating it as background.

What a development bank actually provides

Four instruments, each solving a different problem.

Senior debt at tenors no commercial bank will offer in this market — seven to fifteen years where a commercial lender offers three. For infrastructure and industrial projects, tenor is often more valuable than rate.

Equity and quasi-equity, taking a minority position alongside a sponsor. This is as much a signalling instrument as a financing one: a development bank on the cap table changes how other lenders assess the project.

Guarantees and risk-sharing, including trade finance guarantees that allow local banks to confirm letters of credit they otherwise could not, and first-loss instruments that make a project bankable for commercial capital.

Technical assistance, funded separately, covering feasibility work, environmental studies and institutional capacity in the counterparty.

What it requires in return

This is where companies are most often unprepared.

Environmental and social standards apply to the whole project, not just the financed portion, and they are enforced through covenants with real consequences. Expect a full assessment, a management plan and ongoing reporting.

Procurement rules apply to what the project buys. If a development bank finances your facility, your own purchasing may need to follow their procurement policy — competitive, documented and auditable.

Integrity due diligence covers beneficial ownership through every layer, related-party transactions and the sanctions position of everyone connected to the transaction. It is thorough and it takes months.

Reporting obligations continue for the life of the facility.

What it de-risks, and what it does not

The genuine de-risking is threefold: tenor, which no commercial source will match; the practical deterrent effect of a multilateral institution's presence on arbitrary administrative action; and the credibility that lets other financiers participate.

What it does not do is remove war risk, guarantee your project against physical damage, or accelerate anything. Development bank processes are thorough and slow by design, and a company that starts the conversation when it needs money in three months has started too late.

How to approach it

Practical sequence, for a company that has not done this before.

Start eighteen months before you need the money. The diligence, the environmental work and the internal approvals cannot be compressed.

Get your own house in order first: clean corporate structure, documented beneficial ownership, audited accounts to a recognised standard, and no related-party arrangements you would not want examined.

Understand which institution fits. The EBRD, the EIB, the IFC and the national development finance institutions have different mandates, sector preferences and instruments. Approaching the wrong one costs six months.

And engage the technical assistance facilities early. Feasibility and environmental work funded by a donor rather than by you is a material saving, and it also produces documentation in the format the eventual lender expects.

The wider point

For the next decade, a large share of the capital deployed in Ukraine will pass through or alongside development finance. A company that treats development bank procedure as an obstacle will be outcompeted by one that treats it as a capability and builds the internal function to handle it.

That capability — environmental compliance, procurement documentation, integrity reporting — is transferable to every other market where these institutions operate, which makes the investment in building it considerably easier to justify.

Related in this archive

• Consortium models for reconstruction contracting: who does what and who carries what
• Reconstruction readiness: what preparation actually means for a company
• The Ukraine Facility: what changes when financing gets a calendar

When a development bank is in the deal your preparation takes longer and your collection risk gets shorter, and I take that trade knowingly. Even in the years when the documentation felt like busywork, I have never had an unpaid receivable on a deal that carried it. For a small or mid-sized supplier what the bank really adds is not money but the fact that the other side also has to follow the rules.