Financing is for Kormotech to build a second production plant in Lithuania
By Vanora Bennett
The European Bank for Reconstruction and Development (EBRD) is providing Kormotech, one of Ukraine’s leading pet food producers, with a finance package to expand its export operations and geographical diversification by building a second pet food plant in Lithuania. The total cost of the project will be €63 million(US$68.4million).
The package is a syndicated A/B facility of €40 million, of which €20 million will be provided by the Dutch-based and SDG-focused asset manager ILX Fund.
The Bank previously provided €15 million to Kormotech Group, a long-standing EBRD client, for the construction of its first production facility in Lithuania, which has been operational since June 2020. It also provided a €3.3 million working capital loan during the Covid-19 pandemic in 2020.
Kormotech Group is one of the top three market players in the Ukrainian pet food market and the primary Ukrainian producer of high-quality pet food for cats and dogs. The company is privately owned and has grown rapidly since its establishment in 2003. Its orientation towards export and geographical diversification are helping it mitigate the economic impact of Russia’s war on Ukraine.
The project will help to strengthen Kormotech’s human resources and skills development practices in response to ongoing labour market challenges in Ukraine, in particular opening up new employment and training opportunities for women workers, veterans and other under-served groups. It will also enhance Kormotech’s energy efficiency.
EBRD finance is supported by grant funding, including a grant provided by the Japan-EBRD Cooperation Fund to partially cover external legal costs. Grant funding also partially covers the costs of new workplace equipment opening livelihood opportunities for under-served groups – particularly women workers and people with disabilities – through the EBRD’s new Human Capital Investment Incentive Programme.
The loan will be provided to the Group’s holding company Vengast Investments Ltd (Cyprus) and its subsidiary in Lithuania, Kormotech UAB.
The EBRD is the largest international financial investor in Ukraine. Since the start of the war in 2022, the Bank has made €5 billion available to the Ukrainian economy, and secured agreement for a €4 billion capital increase to continue lending at this increased level during wartime before stepping up further when the time comes for full reconstruction.
