UAE’s SWFs to Offer Financial Support to War-Torn Ukraine

Abu Dhabi Investment Authority (ADIA) and ADQ, two State-owned investors of the UAE, are not only known for the business acumen but there is another angle to their activities – offering financial and humanitarian support to war-torn regions.

During its meeting with Ukraine’s Deputy Prime Minister and Minister of Economy Yuliia Svyrydenko on Sunday, a high-level delegation comprising officials from the two UAE-based sovereign Wealth Funds (SWFs) have evinced interest in supporting the war-torn Ukraine in setting up Ukraine Development Fund (UDF).

The delegation was headed by the UAE’s Head of the Office of International Affairs and Environment Minister Mariam Almheiri. The meeting discussed the immediate need to stabilize the financial system in the short-term and post-conflict reconstruction and trade partnerships in the long-term.

Ukraine’s Deputy Minister of Economy Oleksandr Hryban, presented plans for UDF, which is being developed by the Ministry and the President’s Office with the advisory support from BlackRock. UAE-based consulting firm Contango, which acts as a business development partner for ADQ’s portfolio companies, signed a co-operation agreement with the State Property Fund of Ukraine (SPFU) to provide strategic consulting services to support future economic transformation, including the creation an SWF.

Before the Russian invasion, the UAE’s Mubadala was planning to play an active role in Ukraine’s economic development. In February 2021, Masdar, the green energy company set up by Mubadala, signed a deal with DTEK Renewables, Ukraine’s largest private power producer, to examine potential clean energy investments.

Ukraine wants to increase its share of renewables to 25% by 2035 and DTEK, whose portfolio includes 1 GW of solar and wind power units, was the ideal choice for Masdar.

Ukraine’s wind energy potential is estimated to be at 30,000 GW with over half the land area suitable for wind farms. Solar energy has also driven growth, assisted by feed-in tariffs. Before the war, hydropower provided 7% of power generation.

The UAE’s sovereign wealth sector is estimated at more than $2 trillion, of which Abu Dhabi’s two SWFs represent 70% of combined Assets under Management.

The UAE has sent over 230 tonnes of humanitarian aid (medicines, medical equipment, food etc) and four ambulances to Ukraine ever since war broke out with Russia. The UAE government has provided $4 million for the construction of 10 orphanages and donated another $4 million for the construction of 10 family-type orphanages in Ukraine.

To support Ukraine in overcoming the energy crisis caused by the aggressor’s actions, the UAE has supplied 2,500 generators to Ukraine as part of the $100 million humanitarian aid provided by the UAE leadership.

Trade Ties

According to the UAE Ministry of Foreign Trade, the non-oil trade between the Emirates and Ukraine was around $900 million in 2021 registering an increase of 29% over 2020 and 12% more than in 2019.

The UAE Minister of state for Foreign Trade, Thani Al Zeyoudi, and Yulia Svyrydenko, have signed a joint statement to have a Comprehensive Economic Partnership Agreement (CEPA) between the two countries.