For Lenna Koszarny, the Canadian-born head of Ukraine’s largest private equity group, Horizon Capital, there was never any question of stopping work or leaving the country when Russia launched its invasion in February 2022. But continuing to do business took resolve. “You’re in the centre of a hurricane,” she said.
More than 7,400 missile and 3,900 drone attacks have been launched against Ukraine since the war began, and working through them is part of daily life. “The air raid sirens go off, you go into the bomb shelter, you take your computer … and you keep working until the all-clear comes.”
There have been no casualties on her team. It’s a different story for the wider business community, where an estimated third of companies have suffered fatalities. And yet Horizon, which manages $1.6bn (£1.26bn) in assets, has remained open throughout. “We haven’t shut the offices one day since the invasion.”
The company’s 35 staff relocated to Lviv, near the border with Poland, for a few weeks at the start of the invasion, but Koszarny and her team soon returned to Kyiv and have remained in the capital since then.
Horizon has managed to not only keep its doors open and its employees safe, but to raise $350m in a funding round that originally began in October 2021. After a delay caused by Russia’s full-scale invasion, fundraising resumed, and the cap was raised from $200m to $300m, and then raised again, in a process that closed this month. It will be the first and largest private equity fund raised during the conflict.
Backers include the European Bank for Reconstruction and Development and the Rockefeller Foundation.
Amid the bombardment, talk of capital raising can feel out of place, but Ukraine’s ability to keep its economy afloat and continue exporting is crucial to the war effort.
“Everyone across the board feels it’s a patriotic duty to operate and pay taxes; 60% of budget comes from private sector taxes. That is what is paying the wages of military in Ukraine,” said Koszarny.
Horizon Capital traces its history to the post-Soviet era. In the 1990s, after the fall of communism, the US set up a string of investment funds in eastern Europe, including one for Ukraine and Moldova. Horizon, which still invests in both countries, was spun out into a private entity in 2006.
Horizon usually takes a minority stake, typically the only outside investor alongside company founders. Its focus is on export-oriented sectors: IT, food and agriculture, and light manufacturing; businesses that generate hard currency – the euros and dollars needed to fund Ukraine’s defence.
Its portfolio includes Rozetka, an Amazon-style e-commerce platform; Ajax, which makes wireless home-security systems and sells across Europe; and the discount retailer Avrora. A mid-market pound shop concentrated in south and east Ukraine, Avrora took a hit after the invasion, falling from 863 stores to 636 as areas where it operated were seized by Russia. But it has surged back, growing to about 1,300 stores, with one opening every 17 hours. On its shelves, 80% of the stock is made in Ukraine. Managers also used their expertise to set up a humanitarian logistics network, moving cargo from 48 locations to send aid to local communities.
Horizon’s Moldova ventures have included the Purcari winery, which listed on the Bucharest stock exchange in 2018.
Koszarny grew up in Canada’s 1.4 million-strong Ukrainian community, where she was taught the language, traditional dancing, and learned to play the bandura, a lute-type instrument. “It was instilled in me that Ukraine was not free, Ukraine was not independent, that hopefully, in my lifetime, I would see that. When it happened, I was 22 years old; it was a dream come true.”
She moved to Ukraine in 1993, two years after independence, working for the accounting firm Coopers & Lybrand, now PricewaterhouseCoopers, before co-founding Horizon in 2006. The company is rare in the world of private equity as a firm founded and run by a woman, and Koszarny described its approach to investing as “gender-smart”.
In 2015, after the annexation of Crimea, she helped organise the first Ukraine House at Davos, a fringe event to the World Economic Forum that has taken centre stage since 2022. She is one of four women who, unpaid and in their free time, run the event each year. “We had seen red lines crossed in 2014 with the invasion of Ukraine, international order crumble, and limited reaction. We decided it was important for Ukraine’s voice to be amplified,” said Koszarny.
They started in one room in a former Timberland store in 2015, and now have 3,767 sq ft (350 sq metres) in a house on the town’s promenade.
This year at Davos, Volodymyr Zelenskiy, Ukraine’s president, called on western governments to seize Russian assets and use them to fund the reconstruction. About $300bn-worth belonging to the Russian central bank have been frozen in the west, largely in foreign currency, gold and government bonds.
About £26bn of that is in the UK, and David Cameron, the British foreign secretary, has been vocal about making it available to Ukraine. He too made the case at Davos, saying: “At the end of the day, Russia is going to have to pay reparations for its illegal invasion, so why not spend some of the money now, rather than wait till the war is over.”
The City of London is resisting, concerned it could discourage other states from banking in the UK. Legislation may be needed to force financial institutions into handing over the cash. A recent report put the cost of reconstruction at $500bn.
“Folks need to find a legal mechanism for Ukraine to be able to rebuild and that bill is starting to mount,” said Koszarny. “Should the aggressor nation or western taxpayers pay for that?”
For Koszarny, and many like her, Ukraine’s future is as part of the EU. The country has applied to join the bloc, and been accepted into the accession negotiations process. There has been some resistance, particularly from member states that fear Ukraine’s vast agricultural sector will damage their own farmers.
Despite the war, the country still exports enough food to feed 400 million people. It also has the second-largest gas reserves in Europe and the lithium needed to build electric car batteries.
“It’s in the EU’s interests,” she said. “Ukraine should not be a buffer country; it is a strong actor in its own right that has defended the gates of Europe. For the EU and its members, it is in their national security and economic growth interests that Ukraine be part of the fold.”
