KYIV, Jan 22 – Ukraine mulls creating the National Investment Fund, which will hold shares of large state-owned companies to prepare them for IPO, Olha Mahaletska, the head of the Office of the National Investment Council, said.

The office said another idea currently under consideration is creating the State Fund of Funds that will support with lending and help Ukrainian startups operations and projects. The SFF would probably add more than 1% of GDP, she said.

"Among the initiatives that are proposed to be considered for the National Economic Strategy of Ukraine is the creation of a National Investment Fund for the transformation of state-owned enterprises, the stakes in which will be under its management, into effective and profitable companies, as well as the State Fund of Funds,” Mahaletska said. “It will activate the development of the investment fund industry."

The State Fund of Funds would invest in other funds instead of directly investing in stocks and bonds of companies. The mechanism of operation is the financing of investment funds that have already received investments from a limited list of first-class foreign investors, such as the EBRD and IFC.

The seed capital of the State Fund of Funds will be the national budget of Ukraine (10-20%) and international financial institutions (IFIs, 80-90%).

Earlier, the government of the country considered the possibility of creating a "fund of funds" to support Ukrainian startups on the basis of public-private partnerships. However, instead, in 2019, the Ministry of Finance launched the Ukrainian Startup Fund.

It is expected that the NIF will hold shares of 10-15 large state-owned companies, and in the future the number of such companies held and managed by the fund may increase, Mahaletska said.

The main task of such an investment fund is to increase the efficiency of state-owned enterprises through the corporatization. In particular, the NIF will be able to appoint its representatives to the company's supervisory boards.

"The task of the highest level is to prepare the enterprise for an initial public offering of its shares on a stock exchange," Mahaletska said.

Tymur Khromaev, the Head of the National Securities and Stock Market Commission, earlier proposed to create the National Investment Fund, which will include minority stakes in about 20-30 strategic enterprises. The IPO of this fund will increase the investment attractiveness of Ukraine and provide the prerequisites for a successful IPO for these enterprises. (om/ez)