Our Strategy

Diversified Resilient Economy

• Diversified non-commodity reliant economy with consistently high GDP growth across the last decade

Top-ranked in economy environment indices

• Seventh in "Ease of Doing Business" (2020).
• 2^nd in regulatory quality, 3^rd in government effectiveness and 6^th in control of corruption indices among upper-middle income countries (World Bank, 2021).
• Low corruption and bribery risk (Transparency International, 2022 and Trace International, 2022).

Investment-led GDP growth

• Development of large public infrastructure programmes backed by multilateral international funding driving potential GDP growth.

• Infrastructure expenditures have reached record-high levels in 2019-2022 and stood at 6.7% of GDP in 2022, with public investment set to continue supporting growth in the medium run.

• The resilience and flexibility of the Georgian economy have been underscored by two consecutive years of double-digit economic growth, as the economy expanded by 10.5% y-o-y and 10.1% y-o-y in 2021 and 2022 accordingly. Despite the global slowdown, Georgian economy continues to expand robustly with preliminary 1Q23 growth rate at 7.2%. 

Historically low inflation with 3% target set from 2018 by National Bank of Georgia

• Inflation, like elsewhere around the world, was elevated at an annual 11.9% in 2022, as the Russian invasion of Ukraine exacerbated residual price pressures induced by the COVID-19 shock. However, inflation went back to single digits in December 2022 amounted to 9.8% and continued decelerating trend in 2023, with April headline number falling below the 3% target (2.7% y/y). The National Bank of Georgia has started gradual exit from the tight monetary policy and reduced the policy rate by 50 bps to 10.50% as of May 2023.

Access to capital

• Only Group of its size and scale focused on investing in and developing businesses in Georgia.
• Uniquely positioned given the access to capital in a small frontier economy.

Access to management

• Highly experienced senior management team, which grew BGEO Group (predecessor company) by c.33 times in asset size between 2005 and 2017.
• Reputation among talented managers as the “best group to work for”.
• Attracted talents have demonstrated a solid track record of successful delivery.
• Proven track record in turning around companies and growing them efficiently.
• Proven track record in monetising investments through cash exits.
• A platform for entrepreneurs to build institutions (entrepreneurship culture):
  • If we do not have the right people, then we do not invest, no matter the attractiveness of the opportunity.

Strong corporate governance

• Strong Board comprised with mainly of independent directors with extensive international experience.
• Outstanding track record in institutionalising businesses, creating independently run/managed institutions.
• Approximately 40 employees at the holding company level.
• Highly experienced management team in each portfolio company with a strong measure of independence.
• Aligned shareholders’ and management’s interests by share compensation.
• High level of transparent reporting.
• Delivered on last year’s commitment to disclose against the Task force on Climate-related Financial Disclosures (TCFD framework) and enhanced ESG reporting by publishing our first annual standalone Sustainability Report.

Capital allocation

• Highly disciplined approach to unlock value through buying, developing and monetising businesses.
• GCAP develops and grows portfolio companies to equity value of GEL 300 mln+ and realizes proceeds through exit, as investments mature.
• Disciplined when investing by buying at reasonable prices.
• 360-degree analysis to be performed when evaluating capital returns, new investment opportunities or divestments.
• Exit options are set prior to making an investment decision.
• Georgia Capital does not have capital commitments or a primary mandate to deploy funds or divest assets within a specific time frame. As such, it focuses on shareholder returns and on opportunities which meet its investment return and growth criteria.

Managing portfolio companies

• Attracting and developing talent is a top priority.
• Aligned management style with institutionalised/ noninstitutionalised portfolio companies.
• Share ownership plans (proxy shares) for portfolio companies’ management.