Our Strategy

Georgia Capital — Strategy

Georgia Capital strategy is based on three key pillars

Georgia

Diversified Resilient Economy

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

Top-ranked in economy environment indices

  • #6 in ease of doing business (2018)
  • Top-8 in Europe region by Economic Freedom Index (Heritage Foundation, 2019) and #16 internationally
  • Low corruption and bribery risk (TI, 2018 and Trace international, 2018)

Investment-led GDP growth close to 4.5% growth expected in 2019

  • Double-digit growth of external demand and expansionary fiscal policy supports economic activity
  • Large public infrastructure programs backed by multilateral international funding driving potential output

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

3-fundamental enablers

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
  • Flexibility to use own shares as acquisition currency

Access to management

  • Reputation among talented managers as the - “best group to work for”
  • Attracted talents have demonstrated solid track record of successful delivery
    • Track record of creating three listed companies from Georgia, on the premium segment of the London Stock Exchange
  • Georgia Capital is a platform for entrepreneurs to build institutions

Strong corporate governance

  • Strong board, composed solely of independent directors with extensive international experience 
  • Approximately 25 employees at the management company level
  • Highly experienced management team in each portfolio company with a strong measure of independence
  • An efficient cost structure, targeting to have platform costs at a maximum of c. 2% of the Group’s market capitalization, with strong alignment of shareholder and management interests
  • High level of transparent reporting
     

Capital allocation & Managing portfolio companies

Capital allocation

  • Highly disciplined approach to unlock value through buying and developing businesses, targeting high-multiple businesses, defensive industries – service, consumer
    • Consider greenfields through mature stage companies
  • Clear, company specific, exit paths through IPO, trade sale, fund structure or promoting interest over a 5-10 year period
  • Disciplined when investing, with focus on developing and acquiring high quality assets at reasonable prices, institutionalising the businesses with strong governance and portfolio management principles, while pursuing exit routes, at higher multiples
  • 360-degree analysis to be performed when evaluating capital returns, new investment opportunities or divestments
    • Buybacks to be actively considered as an investment opportunity when appropriate and subject to rigorous analyses 

Managing portfolio companies

  • Attracting and developing talent is a top priority
  • Aligned management style with institutionalized/ non-institutionalized portfolio companies
    • Advisory approach for management of more mature phase companies
    • Hands-on management approach to the non-public portfolio companies at early stages of their development
    • Board participation (if needed) in publicly listed companies
  • Share ownership plans (proxy shares) for portfolio companies’ management
  • Track record of Institutionalizing and creating independently managed healthcare business

Two additional strategic priorities beyond the core strategy

Georgia Capital added two more pillars to its core strategy going forward from June 2019

Decrease share of listed assets to 20%

Reduce the share of listed assets to 20% of the portfolio over the next five years, primarily through growing the private business portfolio  

Third-party money management

to aim to start managing third-party money in Georgia