London Stock Exchange welcomes Bank of Georgia Group Plc and Georgia Capital Plc

London Stock Exchange welcomes Bank of Georgia Group PLC (LN: BGEO) and Georgia Capital PLC (LN: CGEO) to the premium listing segment of the Official list and to trading on the London Stock Exchange's main market for listed securities. The demerger of BGEO Group PLC into two separately London-listed businesses has therefore become effective.

Bank of Georgia Group PLC comprises: a) retail banking and payment services, b) corporate investment banking and wealth management operations and c) banking operations in Belarus (“BNB”). JSC Bank of Georgia (“BOG” or the “Bank”) is the core entity of Bank of Georgia Group PLC and a leading universal Georgian bank, which is well positioned to benefit from the underpenetrated banking sector in Georgia through providing best in class services.

JSC Bank of Georgia is the leading retail banking player in Georgia, serving c.2.4 million clients through the widest network of 277 retail branches, 842 ATMs and 2,825 Express Pay (self-service) terminals, a sales force of more than 3,000 people, along with our diverse products and services. The retail banking business, the prominent component of its business, runs a client-centric, multi-brand strategy, which reaches the entire spectrum of retail clients through three well-established and recognised brands: 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; Bank of Georgia – providing long-established banking services to mass retail clients; and Solo – targeting mass affluent clients and providing a unique blend of banking and lifestyle products and services.

The Bank is a leading corporate lender in the country, with deep sector knowledge and local expertise. The 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. BOG accommodates more than 2,500 businesses in Georgia and plays its 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 Bank’s wholly-owned subsidiary, Georgian Leasing Company.

JSC Bank of Georgia has been active in asset and wealth management since 2005. Accommodating 1,438 local and international clients from 74 countries worldwide, its 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.

Georgia Capital PLC (“Georgia Capital”) comprises Georgia Global Utilities (“Utility and Energy Business” or “GGU”), m2 Real Estate (“Real Estate Business” or “m2”), Teliani Valley (“Beverage Business” or “Teliani”), Aldagi (“Property and Casualty Insurance Business” or Aldagi”) and investments in two London Stock Exchange premium-listed companies – Bank of Georgia Group PLC (“Banking Business”) and Georgia Healthcare Group PLC (“Healthcare Business” or “GHG”). Georgia’s fast-growing economy provides opportunities in a number of underdeveloped local markets and Georgia Capital targets to capture these growth opportunities in the Georgian corporate sector.

The Utility & Energy Business is operated though Georgia Global Utilities, a water utility business in Georgia, with an upside in electricity generation. GGU has two main business lines - water utility and electric power generation. In the water utility business, GGU has a natural monopoly in Tbilisi and the surrounding area, where it provides wastewater services to 1.4 million people (more than one-third of Georgia’s population). GGU also operates hydro power plants with a total capacity of 149.3 MW and invests in the development of renewable energy projects in the under-supplied Georgian energy sector. Georgia Capital anticipates further growth opportunities for GGU in both of its business lines: pursuing cost efficiencies within the water utility business by targeting improving the worn-out infrastructure and reducing energy consumption internally to preserve the supply available for sale to third parties while also planning the construction of hydro, wind and solar power generation plants. Up to 53MW of hydro projects are currently already under construction, together with 46MW of hydro projects under development, and 100MW wind projects are at the feasibility stage and once complete, GGU expects to commence construction works. As a result, GGU expects to establish a renewable energy platform with 500MW installed capacity in the medium term, targeting 1,000MW installed capacity over the next five years.

The Real Estate Business is operated through m2, which develops residential and commercial properties and hotels in Georgia. m2’s business operations are divided into two segments: a housing development business and a hospitality business. m2’s housing development business is comprised of: (a) a residential development arm engaged in housing development projects in Tbilisi; (b) a construction arm, BK Construction LLC, which engages in construction contracts with third-parties and generates fee income; and (c) m2’s franchise platform for developing third-party land plots using its brand name in order to generate fee income. m2’s hospitality business is comprised of: (a) rent-earning commercial assets, classified as investment property, with a target yield of 10%; and (b) hotel developments across Georgia with a target of 1,000 rooms over the next three years.

The Property and Casualty Insurance Business is operated through Aldagi - a leading player in the local P&C insurance market with a market share of 37.8% based on gross premiums earned. The company offers a wide range of insurance products in Georgia to corporate and retail clients, covering more than 57,000 customers through five business lines: motor, property, credit life, liability and other insurance services. Aldagi’s insurance products are offered through its offices in Tbilisi and large cities across Georgia, a network of insurance agents, partner local banks and non–financial institutions (such as major car dealerships), insurance brokers and online portals.

Teliani is a leading beverage producer and distributor in Georgia, combining three different business lines: a wine business, a beer business and a distribution business. Teliani’s wine business produces and sells wine and vodka products under the Teliani brand in the local market and exports to 14 countries. Teliani’s wine business targets to grow its vineyard base to 1,000 hectares from 86 hectares at 31 March 2018 over the next three years. The beer business produces mainstream beer and lemonade on the local market, while also owning 10 year exclusive license to produce Heineken, Krushovice and Amstel in Georgia and sell in Georgia, Armenia and Azerbaijan. The distribution business primarily distributes Teliani’s wine and beer products as well as third-party products within Georgia. Georgia Capital owns 76% of Teliani.

GHG is the largest integrated player in the fast-growing predominantly privately-owned Georgia Healthcare ecosystem with an aggregated value of GEL 3.5 billion. GHG is comprised of three different business lines: the healthcare services business (consisting of hospitals and polyclinics), a pharmacy and distribution business and a medical insurance business. Georgia Capital owns 57.0% of GHG, with the remaining shares being listed on the London Stock Exchange.

Kaha Kiknavelidze, Bank of Georgia Group PLC CEO commented: “I would like to congratulate and thank everyone who contributed to the smooth and successful demerger of BGEO Group PLC into two well-capitalised, liquid and independent businesses with significant opportunity to create value and reach further heights over the next few years. It is an exciting time for investors too, who now have an opportunity to make investment decisions based upon the individual merits of each of these businesses. As for Bank of Georgia Group PLC, with a strong macroeconomic environment and outlook supporting the Bank and its clients, our banking business continues to grow and we aim to leverage our capabilities to continue to deliver superior returns to our investors.”

Irakli Gilauri, Georgia Capital PLC Chairman and CEO commented: “I am delighted to see that BGEO Group today completed its successful demerger, creating two distinct entities – Bank of Georgia Group PLC, a pure-play banking story, and Georgia Capital PLC, the only diversified investment vehicle in Georgia. Having grown our various businesses over the last 10 years into leading players in their respective sectors, this is the next logical step in our strategy, which has created three companies on the premium listing segment of the London Stock Exchange's main market. I would like to congratulate everyone involved in the business for creating this exciting opportunity and say thank you to all for their contribution in reaching this significant milestone in our history. We look forward to continuing, as Georgia Capital PLC, to create long-term value to our shareholders, while capitalising on Georgia’s fast-growing economy with opportunities in a number of underdeveloped sectors.”

Citigroup Global Markets Limited acted as sponsor and joint financial adviser, Numis Securities Ltd. as joint financial adviser and Baker & McKenzie LLP acted as legal advisers.