How we manage our portfolio companies

 

Portfolio Companies

Early Stage

Beverages

Georgia Capital's Beverage Business is a leading beverage producer and distributor in Georgia, combining three different business lines: a wine business, a beer business and a distribution business. Wine business produces and sells wine and vodka products to local market and exports to 14 countries. The beer business produces mainstream beer and lemonade on the local market, while also owning 10 year exclusive license to produce Heineken, Krushovice and Amstel in Georgia and sell in Georgia, Armenia and Azerbaijan. The distribution business primarily distributes wine and beer products of Beverage Business as well as third-party products within Georgia.

  • High growth sector which has doubled during last 5 years to GEL 1.9 billion
  • High multiple business
  • Best-in-class distribution network platform provides competitive advantage to onboard additional beverage businesses
  • Recent free trade agreements with China and EU provide opportunities for growing wine exports
  • 10 year exclusivity with Heineken to produce beer to be sold in Georgia, Armenia and Azerbaijan (c.17mln population)
  • Market leader with 35% market share in premium HoReCa and modern trade segment based on bottle wine sales
  • Increase vineyard base to 1,000 hectares, from current 436 hectares, over the next three years.
  • Local production – 13=2% market share at 30 June 2018 since mainstream beer “ICY” launch in June’17
Hospitality & Commercial real estate

Targeting to spin-off yielding properties as a listed REIT managed by m2

Our hospitality & commercial real estate business is comprised of:

  • (a) rent-earning commercial assets, with target yield of 10%; and
  • (b) hotel developments across Georgia with a target of 1,000 rooms over the next three years, Currently approximately 942 rooms of which 152 are operational and c. 790 are in the pipeline

m2 to pursue an asset light strategy which involves growing a yielding asset portfolio through residential developments/opportunistic acquisitions (which includes commercial rental space and hotels), and taking advantage of a shortage of hotels in a growing tourism market in Georgia.

Renewable Energy

Our renewable energy business invests in the development of renewable energy projects in the under-supplied Georgian energy sector.

  • Untapped energy market with potential for significant growth
  • Low per capita power usage
  • Hydro Power Plants are cheap to build
  • Wind Power Plants generate large portion of annual production during winter, when Georgia faces deficit
  • Targeting 500MW installed capacity over the next 5 years and 1,000MW installed over the long term

Late Stage

P&C Insurance

A leading player in the local P&C insurance market with a market share of 33% based on gross premiums earned in 1H18, offering a wide range of insurance products in Georgia to corporate and retail clients, covering more than 57,000 customers through five business lines: motor, property, credit life, liability and other insurance services.

  • Outstanding ROAE performance
  • Doubled retail portfolio during the last 3 years
  • Target to grow net income to GEL 50 million in 2022 year
  • Lack of digitalisation providing first-mover advantage
  • Compulsory border TPL kicked in from 1 March 2018 and local TPL in 2020
  • Untapped retail Casco insurance market
    • c. 50k cars insured out of 1.2m cars, only 4% penetration
Housing Development

A leading player on Georgian real estate market

  • Cost advantage through the vertical integration of construction, project management and sales platforms
  • Outstanding track record - IRRs ranging from 31% to 329% on 7 completed residential projects
  • m2 seeks to pursue an asset light strategy which involves unlocking land value by developing housing projects, developing third party land in connection with the franchising of the m2 brand  and taking advantage of underdeveloped housing supply
Water Utility

A privately owned natural monopoly in Tbilisi and the surrounding area, where it provides water and wastewater services to 1.4mln people (more than one-third of Georgia’s population).

  • Natural monopoly
  • Stable cash collection rates
  • Dividend engine
  • RAB-based tariff methodology
  • WACC at 15.99% set by regulator

Exit Stage

SHAREHOLDING: 57%

<span>Georgia Healthcare Group</span>
  • 24.9% market share by number of beds (3,320)
  • 30% market share by Pharma sales.
  • The widest population coverage: over 3/4 of Georgia’s 3.7mln population
  • Implying long-term, high-growth expansion driven by potential to develop medical tourism and Polyclinics (outpatient clinics)
  • Only integrated player in the region with significant cost advantage in scale and synergies

SHAREHOLDING: 19.9%
(non-voting shares)

<span>Bank of Georgia</span>
  • High standards of transparency and governance - The first entity from Georgia to be listed on the premium segment of the Main Market of the London Stock Exchange (LSE:BGEO) since February 2012.
  • Leading market position1 in Georgia by assets (34.5%), loans (33.0%), client deposits (34.0%) and equity (28.7%)
  • Strong brand name recognition and retail banking franchise
  • Sustainable growth combined with strong capital, liquidity and robust profitability
  • Outstanding ROAE performance

(1) Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 30 June 2018 www.nbg.gov.ge