Issue 3, 2012. June-July


IPOS, THE WAY TO FUTURE INVESTMENT spoke with Giorgi Tchiladze, the CEO of the Partnership Fund, about the reasons for the delay the Georgian Railway IPO and how the fund will be used to attract Greenfield investment to Georgia.

The decision to postpone the Georgian Railway IPO on the London Stock Exchange (LSE) will not derail the government's new Partnership Fund, according to new CEO Giorgi Tchiladze. He said that, while there was solid interest in the offer - prices had been set between $15.25 to $19 - market "jitters" following Facebook's IPO deal and further crisis in Greece, lead to a decision to delay the listing. LSE rules dictate that the railway will have to wait 12 months before trying again.

Tchiladze, formerly an executive at Bank of Georgia, said the delay does not pose any funding problems for the fund, which was financed by "seed money" from the state, as well as dividend payments from its 25 percent shares in the railway and the Georgian Oil and Gas Corporation.

"Our mandate is very straight forward, very simple. We are established support private sector investment in certain sectors of the economy which the government thinks have great potential for further development," he said, stressing that the fund is a partner for local banks - not a competitor. Sectors of interest include renewable energy, hotels, real estate, and agro business including processing.

Several projects are already under discussion, he said, including Nenskra hydro plant in Svaneti - a potentially $600 million investment - and a partnership with Silk Road Group to build a Radisson hotel in Tsinandali.

With its stock dividends and around 50 million lari in funding from the government, Tchiladze said the fund has plenty of resources to start projects this year - potential partnership deals that could prove to large investors that Georgia is ready to pony up equity financing for Greenfields that will bolster the economy.

"[W]e are set up [to attract investors]. I think an investor can have enough money but, still, it is a foreign country, it is a frontier market and there are some risks from their point of view," he said.

"We are here to tell them we can share those downsides with them, we can partner here and hopefully that will pull their decisions toward more investment."