London, UK, 28 November 2022

Edison issues update on Georgia Capital (CGEO)

Georgia Capital's (GCAP's) NAV per share in Georgian lari (GEL) total return terms was 8.2% in Q322. At the same time, further GEL strength against sterling (driven by the strong local economy) resulted in a 25.5% NAV/share increase in sterling terms. The main driver of GCAP's NAV increase was the strong performance of Bank of Georgia shares (21% of GCAP's portfolio at end-September), which rallied by 52% during the quarter in sterling terms. GCAP's 'live' NAV estimate currently stands at £18.87, with its share price implying a 60% discount to NAV, significantly wider than the average across listed private equity companies.

The Georgian economy exhibits extremely strong momentum (see details below), which has been recognised by international institutions, with the IMF increasing its 2022 GDP growth estimate to 9.0%. GCAP portfolio companies are well-positioned to benefit from the booming economy, as they hold market-leading positions in the Georgian economy (eg 35% of national pharmacies' revenue, a 26% P&C insurance market share) and have good access to capital despite the tightening credit conditions globally (the recent bond issue of GCAP's renewable energy business was the largest corporate bond placed on a Georgian exchange to date). In the current environment, GCAP focuses on deleveraging, with its net capital commitment (NCC) ratio down to 22.2% at end-September from 31.9% at end-2021, on the back of the increase in the portfolio valuation, supported by the US$29m Eurobonds buyback through a modified Dutch auction. Management plans to bring the NCC ratio down further to 15% in the medium term.

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