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.
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. ]
Jerome H. Powell made his debut by expressing optimism in the United States economy. The Federal Reserve agreed to increase interest rates by a quarter of a percentage point – benchmark interest rate from1.5% to 1.75%. This is the sixth time the Federal Reserve raised rates since the global financial crisis. The central bank also signaled a possible two more rate raises in 2018 and three rate increases in 2019.
At the press conference, Powell commented that the U.S. economy was healthier than it had been in 10 years.
Voting for the FOMC monetary policy action were Jerome H. Powell, Chairman; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Randal K. Quarles; and John C. Williams.
17ZUOYE (also known as Homework Together) is an online education platform that is owned by Beijing-based Sunny Education Inc. 17ZUOYE was founded by Liu Chang and Xiao Dun in October 2011. The company raised US$ 250 million in a Series E round in funding led by Singapore’s Temasek Holdings. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
UAE President Sheikh Khalifa bin Zayed Al Nahyan issued a groundbreaking law that restructures the Abu Dhabi Investment Council (ADIC) to be under the Mubadala Investment Company group. Under the new law, the Mubadala Investment Company Board of Directors will now become the Board of Directors for the Abu Dhabi Investment Council. Furthermore, ADIC management will continue to run the council. Eissa Mohammed al Suwaidi will continue to lead ADIC as its Chief Executive Officer, and will report to Mubadala Group CEO and Managing Director Khaldoon Khalifa al Mubarak.
In a release, he commented, ADIC becoming part of the Mubadala Group is yet another step in Abu Dhabi’s efforts to accelerate the diversification of the UAE’s economy. With an investment vehicle of significant scale, world-class talent and wide geographical reach, we enhance the country’s competitive position.”
Earlier in 2017, Mubadala Development Company merged with International Petroleum Investment Company (IPIC). This is a trend in Abu Dhabi to create economies of scale within these large state-owned entities.
In 2007, ADIC started operations after it splintered off from the Abu Dhabi Investment Authority (ADIA). A significant portion of ADIC’s holdings include stakes in large financial institutions in the UAE.
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