US investment fund giant BlackRock has launched a Ukraine Development Fund (UDF) together with the Ukrainian government to attract public and private capital to reconstruct Ukraine, the government said on May 8.

Last week President Volodymyr Zelenskiy met with Laurence D. Fink, the head of BlackRock, the world’s largest manager of assets, to discuss how to attract investment in the country’s war-ravaged economy.

With more than $8.5 trillion of assets under management, BlackRock could play a key role in raising investment to rebuild the country after the destruction wrought on Ukraine by Russia’s brutal invasion.

The cost of the damage done by Russia’s constant shelling and missile strikes against Ukraine varies, but estimates run from several hundred billion dollars for just the physical damage up to $1 trillion for the total damage inflicted by the Kremlin.

The World Bank estimated in March that Ukraine will have to invest $411bn over the next ten years to recover and rebuild from the war, with just the bill for removing rubble running to $5bn alone. The report calculates $135bn in direct damage to buildings and infrastructure so far, not counting the broader economic fallout from the more than year-long conflict.

Raising that much money will be hard, as Ukraine’s industry has been largely destroyed and investors are unlikely to come as long as the threat of renewed Russian aggression remains.

The UDF is part of the government's wider plans for post-war reconstruction. The Ministry of Economy appointed BlackRock to advise on the launch of the fund free of charge. The appointment of BlackRock was discussed at a meeting in Kyiv between Zelenskiy and a BlackRock delegation to Kyiv on May 5.

According to the head of the BlackRock consulting group, Charles Hatami, the reconstruction effort will create significant opportunities for investors to participate in the recovery of the Ukrainian economy. However, he added that only with the close co-operation of public and private capital will it be possible to obtain the necessary financing.

The international financial institutions (IFIs) have already rolled out programmes to deal with the most pressing issue like housing and energy but most are one to two orders of magnitude too small to completely rebuild the economy.

The UDF will mobilise capital from both domestic and international sources to finance reconstruction projects, UBN reports. The fund is expected to invest in infrastructure, energy, agriculture, and other key sectors of the Ukrainian economy.

The fund will also help Ukraine to rebuild critical infrastructure, such as roads, bridges, and power stations, that were damaged during the conflict.

The launch of the UDF is seen as a positive development for Ukraine's economy, and it is hoped that it will attract significant investment from both domestic and international investors.

“We’ve shown that we know how to win on the battlefield,” Zelenskiy said in a statement after meeting the BlackRock delegation. “Another important task for us is to achieve victories in the economy as well, and to be an attractive country for investors.”