TIDMCGEO
RNS Number : 0525F
Georgia Capital PLC
12 November 2020
London, 12 November 2020
Georgia Capital hosts Virtual Investor Day
Georgia Capital PLC (the "Group" or "Georgia Capital") is today
hosting a Virtual Investor Day for analysts and investors. As part
of the investor presentations, the Group will update investors and
analysts on its strategic goals and priorities as summarised
below.
Update on strategic priorities announced in 2019
In 2020, following the buy-out of minority shareholders in GHG
[1] , the Group achieved its previously announced strategic
priority to reduce the share of listed assets in the Group's
investment portfolio to 20% - listed assets comprised c.15% of the
total investment portfolio value as of 30-Sep-20.
Third-party money raising has been put on hold due to COVID-19
outbreak, however, the Group expects to resume efforts, as markets
normalise.
Enhanced strategy for 2020 and onwards
The Group has introduced an enhanced strategy, where Georgia
Capital will focus on larger scale investment opportunities in
Georgia, which have the potential to reach at least GEL 0.5 billion
equity value over the next 3-5 years and to monetise investments
through exits, as investments mature. This larger size will provide
improved liquidity and improved exit opportunities, to support the
Group's desire to reduce the current discount to reported NAV per
share.
The group will now focus on a new breakdown of its private
portfolio companies, ranking them as Large, Investment Stage, and
Other portfolio companies:
-- Large portfolio companies (64% of total portfolio value at
30-Se-20) are companies that are close to reaching a GEL 0.5
billion+ equity value. These are growing, market leading,
cyclically resistant businesses: Healthcare Services, Retail
(pharmacy), Insurance (P&C and Medical) and Water Utility.
-- Investment stage portfolio companies (12% of total portfolio
value at 30-Se-20), being Renewable Energy and Education, have the
potential to reach a GEL 0.5 billion+ equity value. The Group will
be investing only in these two non-cyclical businesses over the
medium term, to scale up them and drive value creation going
forward.
-- The remaining 9% is spread across the five companies in the
private portfolio, which the Group currently believes offer less
scalable growth potential ("other portfolio companies"). Housing
Development, Hospitality and Commercial Real Estate, Beverages,
Auto Service and Digital Services businesses are included in the
"Other" category.
Accordingly, Georgia Capital has adapted its reporting format
and moved to quarterly reporting with greater focus on its large
and investment stage private portfolio companies.
New strategic priorities
In line with the enhanced strategy, Georgia Capital has
introduced two new strategic priorities:
-- realise the value of one of the large portfolio companies,
through a trade sale, over the next 18-24 months;
-- divest the subscale portfolio companies over the next 2-3
years.
Capital allocation outlook
The Group maintains a highly disciplined capital allocation
approach through 360-degree analysis to unlock value through
investments and explore opportunities with high returns. Georgia
Capital expects to allocate US$ 50 million net equity capital in
investment stage portfolio companies (Renewable Energy and
Education) over the next 3-5 years, of which US$ 10 million is
expected to be allocated in 2021. Other than our already identified
greenfield projects in the Renewable Energy and Eduation
businesses, the Group now expects to focus on acquisitions, rather
than new greenfield projects. By driving the development of these
two businesses, the Group expects to realise at least 2x multiple
of invested capital ("MOIC") at each investment level, 20%+ IRR in
Renewable Energy and 25%+ IRR in Education:
-- Over the next 3 years, Renewable Energy will be launching
pipeline projects (wind farms in Tbilisi and Kaspi, Zoti HPP and
Darchi HPP), increasing its run-rate EBITDA earnings to GEL 122
million from the current GEL 45 million.
-- The education business is expected to scale up to a capacity
of 21,000 learners from the current 2,810 learners through
expansion plans in existing schools and targeted acquisitions, by
2025. Over that time period, the run-rate EBITDA is expected to
grow from the current GEL 10 million to at least GEL 50
million.
In addition, the Group will continue to consider the divestment
of low ROIC and/or non-core assets across its private
portfolio.
By driving the development of its defensive, high quality assets
with strong and growing cash flow streams across its large and
investment stage portfolio companies, Georgia Capital expects to
create long-term value for its shareholders and drive NAV per share
growth.
A full set of the presentation slides will be available on the
Georgia Capital website at the end of the event at
www.georgiacapital.ge .
Name of authorised official of issuer responsible for making
notification: Nino Rekhviashvili, Head of Investor Relations and
Funding
About Georgia Capital PLC
Georgia Capital is a platform for buying, building and
developing businesses in Georgia with holdings in sectors that are
expected to benefit from the continued growth and further
diversification of the Georgian economy. The Group seeks to capture
growth in the sectors in which it currently operates and drive the
development of new high-growth businesses in Georgia, which it
intends to add either by acquiring businesses in their early
development stage or by establishing greenfield businesses, often
consolidating fragmented or underdeveloped markets. Georgia Capital
currently has the following portfolio businesses: (i) a healthcare
services business; (ii) a water utility business; (iii) a retail
(pharmacy) business, (iv) an insurance business (P&C and
medical insurance); (v) a renewable energy business (hydro and wind
assets) and (vi) an education business; We also hold other small
private businesses across different industries in Georgia and a
19.9% equity stake in LSE premium-listed Bank of Georgia Group PLC
("BoG"), a leading universal bank in Georgia.
JSC Georgia Capital has, as of
the date hereof, the following
credit ratings:
S&P Global 'B'/FC & 'B'/LC
Moody's B2/CFR & B2/PDR
For further information, please visit www.georgiacapital.ge or
contact:
Irakli Gilauri Giorgi Alpaidze Nino Rekhviashvili
Chairman and Chief Executive Chief Financial Officer Head of Investor Relations
ir@gcap.ge +995 322 005 000 + 995 322 005 045
ir@gcap.ge ir@gcap.ge
This news report is presented for general informational purposes
only and should not be construed as an offer to sell or the
solicitation of an offer to buy any securities
[1] Further details of the transaction are available at the
following link: https://georgiacapital.ge/ir/offer-ghg .
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