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, 2021 and Trace International, 2021).

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 2019-2021 and are planned at another high of 8.8% of GDP in 2022, with public investment set to continue supporting growth in the medium run.

• Economic resilience has been underscored by a double-digit real GDP rebound of 10.6% in 2021, as the economy also overtook its 2019 level by 3.2%. Real GDP growth reached 10.2% in 9M22, maintaining pace.

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 9.6% in 2021 due to the COVID-19-induced supply side pressures and swiftly recovering domestic demand, with the National Bank of Georgia tightening the monetary stance (monetary policy rate highest since 2008 at 11% as of September 2022) and reaffirming commitment to achieving the 3% inflation target. With the Russia-Ukraine war exacerbating inflationary pressures, inflation is expected to slowly decelerate but remain above the target during 2022.

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.