The European Bank for Reconstruction and Development (EBRD) is providing Kormotech, a leading Ukrainian pet food producer, with a financing package to increase exports and geographic diversification by building a second pet food plant in Lithuania, the EBRD press service reports.
According to the release, the total cost of the Kormotech project will be EUR63 million.
The allocated financing package is a EUR40 million A/B syndicated loan, of which EUR20 million will be provided by the Dutch SDG-focused asset management fund ILX Fund.
The bank has previously provided EUR 15 million to Kormotech Group, a long-standing EBRD client, for the construction of its first plant in Lithuania, which began operations in June 2020. The bank also provided a EUR3.3 million loan to the company to replenish working capital during the Covid-19 pandemic in 2020.
The EBRD loan is accompanied by grant financing, including a grant from the Japan-EBRD Cooperation Fund, which partially covers the costs of external lawyers. The grant funding will also partially cover the cost of new workplace equipment that will create new livelihoods for groups that need more attention, including women and people with disabilities. This component is being implemented as part of the EBRD’s new program aimed at stimulating capital investment.
The loan is 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 beginning of the war in 2022, the bank has provided EUR 5 billion to the Ukrainian economy and agreed with shareholders to increase capital by EUR 4 billion, which will allow it to continue lending at current levels during the war and further increase volumes during the full-scale recovery phase.
Kormotech is a global family-owned company with Ukrainian roots that has been producing cat and dog food under the Optimeal, Club 4 Paws, Woof! and Meow! brands since 2003. The company has production facilities in Ukraine and the EU, with a product range of over 650 items. Its focus on exports and geographic diversification helps it withstand the impact of Russia’s war against Ukraine.
The new project will also help Kormotech strengthen its human resources and skills development efforts in light of the current challenging situation on the Ukrainian labor market, including creating new employment and training opportunities for women, veterans, and other groups that require more attention. It will also enable Kormotech to improve energy efficiency.
In 2023, Kormotech’s turnover increased by 22.5% to $152 million from $124 million in 2022. The ratio of sales abroad and in Ukraine in tons is now 31% to 69%, respectively (in 2022 it was 28% to 72% in Ukraine).
Kormotech brands grew most dynamically in the markets of Romania (+35%), Poland (+11%) and Moldova (+11%).
Kormotech is a leader in Ukraine, one of the world’s top 50 pet food producers and one of the top 21 most dynamic pet food brands. The ultimate beneficiaries of Kormotech are Olena and Rostyslav Vovk.
