Issue 6, 2012. December-January

   

GEORGIA AND INTERNATIONAL MARKETS

Are Georgian companies ready to list on international stock exchanges? Analysts from the London Stock Exchange (LSE) believe the potential is there - especially in the finance and transportation sectors. Ayuna Nechaeva, a business development manager at the London Stock Exchange, told Investor.ge that Bank of Georgia's successful premium listing on the LSE underscores the latent potential in Georgia.

"I think Georgia presents a huge potential and I think there are a lot of good companies from various sectors," she said.

"As you know Bank of Georgia has recently moved to the highest standards listing on the London Stock Exchange, the premium listing, and this represents the ability of a Georgian company to attract international investment, and to attract huge sums of money, while also maintaining a very good position on the international market, and I think there are many more companies of this caliber to come from Georgia, both in the medium term and in the long term."

Nechaeva was in Tbilisi for the KPMG Raising Capital in London conference on November 27, which brought specialists from Dechert, the London Stock Exchange, KPMG, and other companies to speak with an estimated 65 businesses about listing internationally.

Andrew Coxshall, a partner at KPMG Georgia, said the LSE was interested in holding the event in Tbilisi because they view Georgia as a "good place to start for the region" to expand their client base.

"Georgia has a very good finance sector, so we would like to see the finance sector developing and more companies from this sector coming into the international markets," Nechaeva said. "Also, the transport sector is doing well. So these are the two I see huge potential in."

To date, the Bank of Georgia is the only Georgian company to list on the capital markets. There is increased interest in tapping into the private sector's potential to attract investors at home, however, by creating a pension fund.

Earlier this year, the former government proposed a law to encourage long term savings through a fund that could have been used as a private pension fund. While the law was not ultimately passed by the parliament, the potential to create long term financing through funds is still being discussed. Finance Minister Nodar Khaduri told Investor.ge the new government believes developing the capital market is "important."

The creation of a pension fund could be a solid stepping stone for developing a capital market in Georgia, noted Nechaeva. "Pension funds usually play a huge role in capital markets, specifically private pension funds...this is seen as a very good development," she said.

"If there is a local liquid and deep market, it means the development of the local stock exchange is great thing to happen and then local companies may list in the local stock exchange: try it out first and then go out internationally should they need international capital. It is a stepping stone."