Georgia Capital - Sale of majority stake in the water utility business
On 31 December Georgia Capital (GCAP) announced it has agreed to sell an 80% stake in its water utility business (held through Georgia Global Utilities, GGU) to FCC Aqualia for a US$180m cash consideration. We estimate the deal values the business at a 13.4% uplift to its carrying value at end-September 2021 (on top of a c 13% uplift in Georgian Lari (GEL) terms that GCAP booked in Q321 vs Q221) and translates into a 2.2pp NAV accretion for GCAP (vs end-September 2021). GCAP will achieve a solid 2.7x multiple on invested capital (MOIC, of which 2.2x realised) and a 20.1% IRR in US dollar terms. GCAP will use US$95.4m of the proceeds to partially fund the redemption of GGU’s US$250m green bond (with the balance provided by FCC Aqualia). GCAP will retain full ownership of the renewable energy assets (now held through GGU).Georgia Capital PLC. Georgia Capital PLC is a United Kingdom-based holding company. The Company is focused on investing in developing businesses in Georgia. Its portfolio companies include Georgian Global Utilities LLC (GGU), JSC m2 (m2), JSC Aldagi (Aldagi) and JSC Teliani Valley (Teliani). GGU carries on business in two areas: water utility and renewable energy generation. m2 is the Company's real estate business. m2 develops residential and commercial property in Georgia, outsourcing design while focusing on project and construction management, and sales. m2 also focuses on developing hotels with outsourced operations. Aldagi is a provider of property and casualty insurance products in Georgia. Aldagi primarily focuses on the Georgian motor vehicle, property, credit life, and liability insurance markets and also on other markets offering cargo and agricultural (Agro) insurance. Teliani is a wine and beer producer in Georgia and its sells its products across 15 countries.
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