The European Bank for Reconstruction and Development (EBRD) is lending US$ 25 million to VARUS, a food retail chain in Ukraine, to support the Group's strategy to expand its retail operations and enhance business sustainability.
Since the start of Russia’s full-scale war on Ukraine in 2022, the food retail sector has faced missile strikes, supply chain disruptions, logistical difficulties, attacks on energy infrastructure and labour shortages and mass population displacement. Yet food retailers continued their operations and play a prominent role within local communities, not only as a source of food and everyday essentials, but also offering access to electricity and internet, aid distribution points and as a local source of employment, including for veterans, people with disabilities and internally displaced people.
This project, whose total cost is US$ 53.1 million, benefits from partial 22 per cent first-loss risk cover provided by the European Union, under the Ukraine Investment Framework (UIF), through the Municipal, Infrastructure and Industrial Resilience (MIIR) Guarantee Programme. So far the EU has deployed a total of €207 million in Ukraine Investment Framework (UIF) guarantees and grants to Ukraine through EBRD, 87 per cent of which has been to the private sector.
The guarantee for Varus plays a critical role in mitigating the elevated macroeconomic and geopolitical risks associated with the investment. The support is granted in recognition of the project’s alignment with the Bank’s Green Economy Transition (GET) approach through energy-efficient upgrades, renewable energy installations, and sustainable logistics improvements. It involves the installation of solar panels, high-efficiency lighting, and reversible split AC units with low global warming potential.
VARUS Group is the fifth largest food retail chain in Ukraine. It operates 114 stores, many of which are in the eastern part of the country, employing approximately 7,500 staff. Despite the closure of some outlets because of the war, the group has built back better and opened more new stores, returning to its pre-war size.
The EBRD loan will enable further expansion of the VARUS network, renovation and equipment upgrades at existing stores as well as a new leased warehouse, and see photovoltaic systems installed to reduce reliance on the electricity grid.
Engagement with the EBRD will help preserve Ukraine’s human capital and employees’ livelihoods despite ongoing wartime difficulties, through technical cooperation. The project will also benefit from a co-investment grant to optimize warehouse logistics, improve energy efficiency, and address urgent human capital needs.
The technical support engagement is funded by the EBRD’s Action for Equality and Gender (A4EG) Multi-Donor Fund, while project preparation and the co-investment grant are funded by the Japan-EBRD Cooperation Fund.
