Kyivstar, Swarmer, and Ferrexpo become first Ukrainian companies to join Ukraine Reconstruction ETF
Kyivstar Group Ltd, the owner of Ukraine’s largest telecom operator Kyivstar, defense technology company Swarmer, and mining company Ferrexpo have become the first Ukrainian issuers to be included in the 50-company basket of the Ukraine Reconstruction ETF, which is listed on the London Stock Exchange.
"It’s exciting to see the first Ukrainian companies joining the ETF Ukraine Reconstruction UCITS. The ETF now provides exposure to both global companies that have the opportunity to help Ukraine’s recovery, as well as Ukrainian companies that will also participate in and benefit from Ukraine’s recovery," Hector McNeil, co-founder and co-CEO of HANetf, the British investment firm that launched the fund, commented in a press release.
To facilitate the early admission of Ukrainian companies to the stock exchange, the benchmark VettaFi Ukraine Reconstruction index has lowered its liquidity thresholds – a move that will signal to Ukrainian companies that there is a buyer for their public shares, according to a press release.
"These aren’t just numbers or indices; they’re a significant step forward. For the first time, an international investment instrument of this caliber is directly investing in Ukrainian businesses. This is about trust. It’s about investors’ faith in Ukraine’s future. It’s about how, even in the most challenging times, Ukrainian companies not only survive, but also grow, integrate into global markets, and attract capital," Ukraine’s Ambassador to the United Kingdom, Valeriy Zaluzhny, wrote on Telegram.
Additionally, Swarmer was also added to the ETF Drone UCITS (DRON), another HANetf fund focused on drone manufacturers.
The VettaFi website does not yet provide information on the proportion of Ukrainian company shares in the fund.
At the same time, Ferrexpo recently warned of terminating its listing on the LSE due to a delay in the publication of financial statements and a planned additional capitalization of at least $100 million, with a current capitalization of approximately $250 million.
Kyivstar and Swarmer shares are traded on the US Nasdaq stock exchange, where their IPOs took place in August last year and March this year, respectively, with a market capitalization of $2.7 billion and $459.3 million, respectively.
"The ETF targets a diversified portfolio of European infrastructure and defense companies, selected global industrial companies, companies listed on Ukrainian exchanges, and a limited portion of Ukraine-focused investment funds," the fund’s presentation noted when it was launched in mid-March of this year.
"At launch, the portfolio consists primarily of well-known European and global listed companies capable of delivering large-scale infrastructure, energy, industrial, and defense projects. These firms are expected to play a central role in reconstruction activities in line with EU-aligned regulatory frameworks," says a press release posted on the LSE website.
As of March, the basket, which is revised quarterly, had the largest weightings of Siemens Energy AG at 5.29%, BAE Systems PLC at 5.20%, Johnson Controls International PLC at 4.55%, ABB Limited at 4.44%, Caterpillar Inc at 4.41%, Vinci SA at 4.27%, Schneider Electric SE at 4.23%, Eaton Corporation PLC at 4.21%, Rheinmetall AG at 4.07% and CRH PLC at 3.86%.
The total market capitalization of all 50 companies was $2.25 trillion. The largest number of companies came from the United States (27.5%), France (16.5%), Switzerland (10.1%), Germany (9.7%), and Sweden (9.4%).
The VettaFi Ukraine Reconstruction index began counting on January 25, 2022, at 1000. On March 13 of this year, its value was 1837.71 points, on April 20 it reached a maximum of 1997.79 points, and on April 29 it was 1982.29 points.
The fund’s net assets, according to information on its website, have grown from just over EUR 1 million to EUR 6.51 million since mid-March, and the number of shares has increased from 130,000 to 780,000, while overall assets under HANetf’s management amount to approximately $5.33 billion.
Trading in the Ukraine Reconstruction ETF on the London Stock Exchange (LSE) began on March 13 at $9.43 per share, and is currently trading at $9.82.
In addition to the LSE, the fund is also listed on the Deutsche Börse Xetra and Borsa Italiana in Milan.