Connect with us

Deep Dive with Irakli Kovzanadze, CEO of Georgia’s JSC Partnership Fund

Irakli Kovzanadze

Irakli Kovzanadze, CEO of JSC Partnership Fund

This interview will appear in the 4Q Y2013 (January 2014) issue of the Sovereign Wealth Quarterly.

This is a deep dive with Irakli Kovzanadze, CEO of Georgia’s JSC Partnership Fund.

1. How does Georgia plan on improving its investment climate?

Through the past decade, Georgia has experienced significant positive changes that were reflected in several indicators and ratings, such as the “Ease of Doing Business” survey, conducted by the World Bank: Georgia moved from 112th place in 2005 to 8th in 2014. In addition, Georgia has been considered as one of the “top reformer” countries.

Georgia has a simplified tax and customs legislation and a favorable market environment. During the past decade the number of taxes was reduced from 21 to 6, and today Georgia is one of the lowest-tax countries in Europe. Moreover, the Government has successfully implemented deep deregulation reforms (limiting state intervention). Due to its strategic location, Georgia is a logistic corridor for the region connecting Europe to Asia.

Georgia has a Free Trade Agreement with CIS [Commonwealth of Independent States] countries and with Turkey. It also enjoys GSP+ [Generalised Scheme of Preferences Plus] with the EU and the U.S. Georgia has recently signed a Deep and Comprehensive Free Trade Agreement with the EU to further simplify trade and export opportunities. The DCFTA will be enforced in 2014.

Further, to improve the investment climate, Georgia plans to reduce state intervention even more and to promote the development of SMEs [Small and Medium Enterprises].

We’ve made tremendous progress in deregulation and the liberalization of the national economy. Currently, the major challenge is to achieve proper utilization of all the abovementioned and to exploit the comparative advantages of our country. This should in turn ensure a new wave of potential investors to solidify Georgia’s superior position as an investment hub relative to other regional economies.

2. Can you please illustrate the reasons for creating the JSC Partnership Fund?

The goal of creating the Partnership Fund (PF) was to promote investment in Georgia by providing the financial instruments (such as equity co-investment, mezzanine financing, etc.) to the market where private equity was at its initial stages of development.

Gardabani Thermal Power Plant

Gardabani Thermal Power Plant

The PF target sectors are energy & infrastructure, manufacturing, agriculture, and real estate/tourism.

The government of Georgia established the JSC Partnership Fund in mid-2011. The fund is 100% state owned. It is overseen by a supervisory board, which is headed by the Prime Minister of Georgia, Irakli Garibashvili.

The PF has several strategically important assets under management: Georgian Railway (100%), Georgian Oil and Gas Corporation (100%), Georgian State Electrosystem (100%), Electricity System Commercial Operator (100%) and JSC Telasi (24.5%). It’s assets under management total roughly US$ 3 billion.

The current strategy of the PF is to attract and to support private investors by complementing the equity with co-investments in profitable and attractive projects.

Georgia’s tourism advantages include an excellent location, a diverse climate, culture, hospitality and a variety of protected areas and destinations (winter and summer resorts) in the region.

3. Is the partnership fund alone a large enough catalyst to jumpstart private investment into Georgia?

The PF is one of the largest companies in Georgia; however, no single entity (despite its size) can catalyze investment by itself. The key catalyst of investments is a business-friendly environment enabled through liberal economic policies and a high degree of economic freedom; the PF is one of the components required to address the almost non-existent private equity market in Georgia.

4. When selecting co-investors for the JSC Partnership Fund, what sort of traits do you look for in partners and investors? Is there a minimum capital commitment amount?[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Concerns Raised at Potential BlackRock Takeover of CalPERS’ Private Equity

The California Public Employees’ Retirement System (CalPERS) has been analyzing options on what to do with its massive US$ 26 billion private equity program. The pension system has embraced the mantra of reducing cost, reducing complexity and reducing risk, the hallmark of its program called “INVO 2020”. CalPERS also wants less, but more strategic relationships with external money managers. At one point, CalPERS was contemplating increasing its direct investment staff to model Canadian pension funds such as Canada Pension Plan Investment Board (CPPIB), OMERS and the Ontario Teachers’ Pension plan. The pendulum has begun to swing the other way as reported earlier by SWFI research staff.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

CDP Signs €1.7 Billion Infrastructure Loan Agreement with Atlantia Group

Cassa depositi e prestiti S.p.A. (CDP) and Atlantia Group’s Autostrade per l’Italia (ASPI) have signed a €1.7 billion loan contract dedicated to upgrading motorways in Italy under concession to ASPI. €1.1 billion will come in the form of a term loan with a 10-year tenure, with the remaining €600 million wrapped up in a five-year revolving loan.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Sovereign Funds Commit to Integrating Climate-Related Risks at One Planet Summit

Representatives from a number of sovereign wealth funds who collectively govern over US$ 2 trillion in assets came together at the One Planet Summit at the Élysée Palace in Paris in order to discuss what public asset owners can do to incorporate climate change-related risks and opportunities into investment considerations.

The newly formed committee – called the One Planet Sovereign Wealth Fund Working Group – includes as its founding members the Abu Dhabi Investment Authority (ADIA), Kuwait Investment Authority (KIA), Qatar Investment Authority (QIA), Norges Bank Investment Management (manager of Norway’s Government Pension Fund Global), Saudi Arabia’s Public Investment Fund (PIF), and the New Zealand Superannuation Fund.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Popular

© 2008-2017 Sovereign Wealth Fund Institute. All Rights Reserved. Sovereign Wealth Fund Institute ® and SWFI® are registered trademarks of the Sovereign Wealth Fund Institute. Other third-party content, logos and trademarks are owned by their perspective entities and used for informational purposes only. No affiliation or endorsement, express or implied, is provided by their use. All material subject to strictly enforced copyright laws. Registration on or use of this site constitutes acceptance of our terms of use agreement which includes our privacy policy. Sovereign Wealth Fund Institute (SWFI) is a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues. SWFI facilitates sovereign fund, pension, endowment, superannuation fund and central bank events around the world. SWFI is a minority-owned organization.