Georgia focused investment platform - Unlocking shareholder value

Our Business

Banking Business
RETAIL BANKING


CLIENT-CENTRIC, MULTI-BRAND STRATEGY FOR OUR C.2.3 MILLION CLIENTS


We are the leading retail banking player in Georgia, serving c.2.3 million clients through the widest network of 281 retail branches, 850 ATMs and 2,842 Express Pay (self-service) terminals, a sales force of more than 3,000 people, along with our diverse products and services. Our Retail Banking business, the prominent component of our business, runs a client-centric, multi-brand strategy, which reaches the entire spectrum of retail clients through three well-established and recognised brands:


1. Express – designed to service emerging retail clients with minimal incremental operational costs through cost-efficient distance channels such as our Express Pay terminals, internet and mobile banking and technology-intensive Express branches; 

2. Bank of Georgia – providing long-established banking services to our mass retail clients; and 

3. Solo – targeting mass affluent clients and providing a unique blend of banking and lifestyle products and services.  

CORPORATE INVESTMENT BANKING


INTEGRATED SOLUTIONS FOR OUR CIB CLIENTS 


Our Bank is a leading corporate lender in the country, with deep sector knowledge and local expertise. Our Corporate Banking business is characterised by outstanding flexibility in meeting our corporate clients’ needs and offers the most comprehensive range of products and services in the country. We are proud to accommodate more than 2,500 businesses in Georgia and play our part in developing various sectors of the economy such as trade, energy, industry and tourism, among others. Corporate Banking additionally serves as the country’s leading trade finance business and provides leasing services through the Group’s wholly-owned subsidiary, Georgian Leasing Company (GLC). 


We are at the forefront of capital markets development in Georgia. We aim to leverage our superior knowledge and capital markets capabilities in the Georgian and neighbouring markets in terms of both reach and expertise that we have accumulated over the past several years through our corporate advisory, debt and equity capital market research and brokerage practices united under Galt & Taggart, a wholly-owned subsidiary of the Group. Our brokerage business serves regional and international markets, including hard-to-reach frontier economies. Our macro and sectoral research currently covers various sectors of the Georgian economy and developments taking place in regional economies. In addition, since August 2017, Galt & Taggart publishes an extensive quarterly report on macroeconomic developments in the Georgian economy, followed by a conference call hosted by Galt & Taggart for interested stakeholders to discuss the developments (subscription to the research on www.galtandtaggart.com). 

WEALTH MANAGEMENT


WE ARE AN ESTABLISHED LEADER OF INVESTMENT MANAGEMENT SERVICES IN GEORGIA


We have been active in asset and wealth management since 2005. Accommodating 1,434 local and international clients from 75 countries worldwide, our Wealth Management business provides private banking services to our high net-worth individual clients and offers investment management products internationally through representative offices in Eastern Europe, the Middle East and Great Britain. The unique offer of the Bank of Georgia provides our clients with the opportunity of investing in Georgia, which many foreign customers perceive as very attractive. As Georgia has a pay-as-you-go pension system, the Bank believes that its wealth management franchise can benefit by focusing on the distribution of local debt. 


In May 2017, we held the first regional conference of Wealth Management in Tbilisi. The event aimed to introduce Georgia as a regional hub for private banking services. The prospects and challenges of making Georgia a regional banking centre were discussed, including the investment climate in Georgia, the country’s economy and the banking sector. The conference was attended by leading financial institutions from the countries of Europe and the Middle East, including Israel and Russia, as well as by international clients and professionals with legal and taxation backgrounds. 

BNB


WELL CAPITALISED SME BANK IN BELARUS 


JSC Belarusky Narodny Bank (BNB) offers individual and business banking services principally to SMEs and middle-income retail banking customers in Belarus. BNB was one of the first privately-owned commercial banks in Belarus, established in 1992. The Group increased its ownership of BNB from 79.99% in 2016 to 99.98% in 2017. The Group is exploring options for realising value from BNB, as it is not located in our core region of focus.

Investment Business
GEORGIA GLOBAL UTILITIES (GGU)


MAJOR UTILITY AND ENERGY COMPANY, WITH CLEAR GROWTH OPPORTUNITIES AND ROOM TO IMPROVE EFFICIENCY


GGU has two main business lines – water utility and electric power generation. In its water utility business, GGU has a natural monopoly that supplies water and provides a wastewater service to 1.4 million people (more than one-third of Georgia’s population) in three Georgian cities: Tbilisi, Mtskheta and Rustavi. In the electric power business, GGU has a portfolio of three hydropower generating facilities (an additional 2.9MW facility under management) with a total of 149.3MW capacity. Generated power is primarily used by GGU’s water business, with the excess amount sold to third parties. GGU is developing hydropower plants (HPPs), as well as solar and wind power sources in Georgia. In 2017, GGU commenced construction of the 50MW HPP in North-Western Georgia (Svaneti region) aiming for the HPP to be operational in December 2018. Moreover, 44.3MW Zoti HPP in Western Georgia (Guria region) is currently under development with a target to complete the construction by the end of 2020. c.100MW wind projects are currently at the feasibility stage and once complete, GGU expects to commence construction works.

m² REAL ESTATE (m²)


A FAST-GROWING, LEADING REAL ESTATE DEVELOPER AND ASSET MANAGER IN GEORGIA


Our real estate business, the Group’s wholly-owned subsidiary m² Real Estate, develops and sells residential and commercial properties in Georgia. For the past couple of years, m²has established itself as one of the most recognisable and trustworthy residential housing brands in the country. 


m² also manages a yielding real estate asset portfolio, which it accumulated through its own developments, as well as opportunistic investments in high street real estate. m² has an exclusive agreement with Wyndham to develop its three-star brand Ramada Encore. First Ramada Encore hotel opened in Tbilisi in February 2018. m² is also developing a three-star Ramada Encore hotel in Kutaisi and a four-star Ramada hotel in Tbilisi. The hotel in Tbilisi is currently under construction. 


In 2017, m² acquired BK Construction LLC, a local real estate construction company, with the aim to bring the construction works in-house to achieve cost and project development efficiencies. The vertical integration of the construction arm into m²’s business model enables the company to generate fee income from construction management from franchised deals and third party constructions. m² focuses on franchising the m² brand and uses its platform to develop third party land plots as part of its “asset light” strategy. m² Real Estate has sold 2,676 apartments worth US$ 222.3 million since 2011 with 99.1% of apartments sold in seven successfully completed projects and 83.2% pre-sales in four ongoing projects.

P&C INSURANCE (ALDAGI)


THE LEADING PROPERTY AND CASUALTY INSURANCE BUSINESS


Our Property & Casualty business (P&C or Aldagi) is a leading player in the Georgian P&C insurance market, with a market share of 38.6% based on gross premiums earned as of and for the nine months ended 30 September 2017. The company offers a wide range of insurance products in Georgia to corporate and retail clients, covering more than 47,000 customers through five business lines: motor, property, credit life, liability and other insurance services. Aldagi’s insurance products are offered through the offices in Tbilisi and large cities across Georgia, a network of insurance agents, local partner banks and non-financial institutions (such as major car dealerships), insurance brokers and online portals. 


Aldagi aims to unlock the full potential of Georgia’s significantly underpenetrated retail insurance segment by extending cooperation with local financial institutions to successfully diversify its multi-channel distribution network, uncover additional sources of high quality customers for its leading insurance products and consolidate its market leadership position in digital insurance, which will enable Aldagi to strengthen its presence in the fast-emerging retail insurance segment.

BEVERAGE BUSINESS (TELIANI VALLEY)


CREATING A LEADING BEVERAGE PRODUCER AND DISTRIBUTOR IN SOUTH CAUCASUS


Teliani is a leading Georgian wine producer and beverage distributor with a wide distribution platform for a variety of imported beverages as well as own produced wine. Teliani sells around 3.5 million bottles of wine annually, with about 68% of sales coming from exports. Building on its existing distribution franchise of c.5,000 sales points, Teliani has expanded into a new business line of beer and soft beverage production, with a ten-year exclusivity from Heineken to sell in three countries: Georgia, Armenia and Azerbaijan – a total population of c.17 million people. The construction of the beer brewing facility completed in 2016 and Teliani launched local mainstream beer and lemonade production in June and August 2017, respectively. The newly launched beer “ICY” was well received by the local market, which immediately earned 97% brand awareness and 16% market share upon launch. Teliani is on track to brew Heineken and Krushovice beers in 2018. With a strong management team and a proven track record, Teliani aims to become a leading beverages producer and distributor in South Caucasus.

GEORGIA HEALTHCARE GROUP (GHG)


THE LEADING INTEGRATED PLAYER IN THE GEORGIAN HEALTHCARE ECOSYSTEM WITH A VALUE OF GEL 3.5 BILLION


Georgia Healthcare Group PLC is the UK incorporated holding company of the largest healthcare services provider and the largest pharmaceuticals retailer and wholesaler in the fast-growing, predominantly privately- owned, Georgian health market. GHG offers by far the most comprehensive range of inpatient and outpatient services in Georgia. GHG targets the mass market segment through its vertically integrated network of 37 hospitals and 12 polyclinic clusters, including 16 district polyclinics and 24 express outpatient clinics, and 255 pharmacies as at 31 December 2017. GHG is the single largest market participant, accounting for 24.5% of total hospital bed capacity in the country as at 31 December 2017. 


GHG is the largest pharmaceuticals retailer and wholesaler in Georgia, with approximately 30% market share by revenue in 2017. GHG has approximately c.2.1 million client interactions per month, with 0.5 million loyalty card members. GHG is also the second largest provider of medical insurance in Georgia with a 29.0% market share based on gross revenue and has approximately 155,000 insurance customers at January 2018.

We believe that our business model is simple and purpose built to capture growth opportunities in Georgia

We are a Georgia–focused investment platform. We have a successful track record of delivering profitable growth for more than a decade, growing our market capitalisation since 2004 by approximately 85 times.

The Banking Business services are offered through Retail Banking, Corporate Investment Banking and Wealth Management, with ancillary business lines including leasing, payment services and banking operations in Belarus through BNB.

The Investment Business includes utility & energy, real estate, the P&C insurance, the beverage and healthcare businesses.

We believe that our Banking Business is the number one or two player on the market in all of its major business lines and that investment businesses are leading companies in their respective markets.

Investors

Regular dividends

Capital returns

 
 
 
 
 

Banking Business

Investment Business

BGEO Group


On 3 July 2017, the Group announced its intention to demerge BGEO Group PLC into two separate London-listed businesses: a banking business, Bank of Georgia Group PLC, and an investment business, Georgia Capital PLC.
Bank of Georgia Group will continue to be a fully-licensed and regulated, systemically important, universal banking business focused on Georgia with industry-leading characteristics. Georgia Capital will be the only professionally managed publicly listed Georgia-focused investment platform with a track record of over ten years of successfully investing in growing companies in the Georgian economy. 


The Board believes the demerger of the

businesses will deliver additional long-term value to shareholders by creating two distinct entities, each of which will have enhanced growth opportunities in the strongly growing Georgian economy. Both businesses are already leaders in their respective fields, with separate strategic, capital, and economic characteristics and strong and knowledgeable management teams. We expect the demerger to benefit the two businesses in a number of areas, most specifically by providing greater flexibility for
each business to manage its own capital and human resources, and to pursue strategic options appropriate to its respective sector. The Board believes that the demerger is the best way to enable the individual businesses to grow faster and develop independently over the next few years. In February 2018, the Board approved the implementation of the demerger. The demerger is subject to shareholder approval at the 2018 AGM and the process is currently expected to complete by 30 June 2018.

RATIONALE FOR DEMERGER


CORPORATE GOVERNANCE POST DEMERGER