Georgia Healthcare Group (GHG)
A long-term, high-growth investment story
GHG is the single largest scale healthcare services and medical insurance provider operating in the fast-growing, predominantly privately-owned, Georgian healthcare market, which is characterised by low utilisation and high fragmentation, leaving significant room for medium-to-long term growth. The healthcare services market (including hospitals and ambulatory clinics) is estimated at GEL 2.1 billion for 2015, with a strong compound growth momentum of 13.5% between 2011 and 2014, which is expected to continue growing at 13.3% during the period 2014-2018. Healthcare services spending per capita is currently at a very low base of only US$ 217, with annual outpatient encounters of only 2.7 per capita and hospital bed utilisation of only 50%, all significantly lower than many comparable countries. Supportive government reforms and the engagement of private players in the sector have resulted in significant improvements in the overall standard of infrastructure and greatly boosted demand for quality healthcare services. With GHG’s scale, efficient operations, breadth and quality of service offering and proven management team, the management of GHG believes that GHG is ideally positioned to take advantage of the expected long-term macroeconomic and structural growth drivers favourably influencing the Georgian healthcare services market. In November 2015, GHG completed an initial public offering on the premium segment of the London Stock Exchange (GHG:LN). BGEO holds a 65% stake in GHG.
m2 Real Estate (m2)
A fast-growing, leading real estate developer in Georgia
Our real estate business, the Group’s wholly owned subsidiary, m2 Real Estate, develops residential property in Georgia. For the past couple of years it has established itself as one of the most recognizable and trustworthy residential housing brands in the country. m2 Real Estate outsources the construction and architecture works while focusing on project management and sales. The Group’s real estate business was founded to meet the unsatisfied demand for housing through our well-established branch network and sales force, while stimulating our mortgage lending business. As of 2015, m2 Real Estate completed sales of 1,660 apartments worth US$ 142.3 million since 2011 with 85% of apartments sold in six successfully completed projects and 36% pre-sales in two ongoing projects. The number of apartments financed with our mortgages in all m2 Real Estate projects totalled 788, with an aggregate amount of GEL 86.7 million as of 2015.
Georgian Global Utilities (GGU)
AMajor utility and energy company, with more efficiency and clear growth opportunities
GGU, in which we acquired a 25% minority interest in December 2014, has two main business lines – water utility and electric power generation—and is a major player on both markets. In its water utility business, GGU is a natural monopoly that supplies water and provides a wastewater service to 1.4 million people (approximately one-third of Georgia’s population) in three cities: Tbilisi, Mtskheta and Rustavi. In electric power business, GGU owns and operates three hydropower generation facilities with a total capacity of 143MW. Generated power is primarily used by GGU’s water business, with the excess amount of generated capacity sold to third parties. GGU posted EBITDA of GEL 63.2 million in 2015. Since 2014, BGEO Group put in place a strong management team and streamlined operations, however we see room for further improvement.
Creating a leading beverages producer and distributor in Caucasus
We operate the largest wine business in Georgia, Teliani, where we have a 71% shareholding. Teliani has a strong existing franchise, being a leading wine producer with a wide distribution platform. Teliani sells 3 million bottles of wine annually, with 60% of sales coming from exports. Building on its existing franchise of distribution, Teliani is currently expanding into a new business line of beer and soft beverage production, with ten-year exclusivity from Heineken to sell in three countries: Georgia, Armenia and Azerbaijan – a total population of 17 million people. With strong management team and a proven track record, Teliani aims to become a leading beverages producer and distributor in the Caucasus.