Donations and divestments: How PE is reacting to war in Ukraine

Inflexion, Invest Europe and KKR are just some of the private equity firms and bodies rallying to support the humanitarian relief effort in Ukraine.

The war in Ukraine is a disaster for humanity. The politics of it all is complicated, with the memory of the Second World War and the 1939 invasion of Poland not far from mind. What’s more, Vladimir Putin’s pretence of combatting Nazism to disguise a blatant land grab in Ukraine is particularly distasteful given President Volodymyr Zelenskyy is the grandchild of a Holocaust survivor.

Some parts of the private equity industry have rallied to donate funds to help the humanitarian disaster in Ukraine, while others, such as Northern European investment giant EQT, have said they are winding down portfolio company operations in Russia.

Following through

Invest Europe, the industry association representing European private equity that advocates for investment firms as well as pension funds and insurers, will donate €100,000 to support the work of the International Committee of the Red Cross in Ukraine. “We have equally issued the call to our 610 members to boost this funding further,” the association said in a statement, condemning the invasion.

London-based private equity shop Inflexion has committed to a donation of £500,000 ($653,000; €596,000) to the Disasters Emergency Committee’s Ukraine Appeal, through the British Red Cross, while KKR is committing $1 million in support for Ukraine.

Institutional investors including Australia’s Future Fund, the New York City Retirement Systems, Canadian pension fund British Columbia Investment Management Corporation, Pennsylvania’s Public School Employees’ Retirement System, and Colorado’s Public Employees’ Retirement Association have said they plan to divest holdings in Russian companies. It is unclear whether any exposure is held via their private equity portfolios.

During a special session at the beginning of March, PSERS discussed its exposure, noting it stands at less than 1 percent of the entire portfolio. The trustees freely condemned the actions of Putin and Russia and offered a promise of divestment.

For the industry at large, specific impacts on investments appear to be limited. However, the impact to global commodities prices – which are already feeling the effect of enhanced inflation – and the European banking system will be more substantial, according to Blackstone president and COO Jon Gray.

Further, while there is a sense in some markets – particularly in the US – that business as usual hasn’t really changed, this is the furthest thing from the truth for many professionals in Eastern Europe whose lives have been fundamentally destabilised.

The week of the Russian invasion, Private Equity International spoke to a PE industry professional based in Ukraine who had decided to fight against the Russian invasion and defend their family. “What gives us confidence is the unity that we have – we are all together,” the investment professional said, admitting that using weapons was something new and not their “biggest talent”. “I am better with numbers, Excel and financial modelling than I am with military equipment. But at this moment, we just try to do the best we can. And if that’s the help my country needs, we are ready for these measures.”