Co-Investment Fund Takes Off
03 October, 2013
Co-Investment Fund Takes Off
The much expected and touted Co-Investment Fund comprising USD six billion of seed capital took off officially on 30 September 2013. The fund will be co-financing large-scale investment projects that require at least five million USD worth investments, while its participation range will vary from 25% to 75%. Investors will not be involved in the management of the fund prioritizing agriculture, logistics, real estate, energy and tourism.
The fund was initiated by Bidzina Ivanishvili, Prime Minister of Georgia and the
richest Georgian with six billion USD in assets, in December of 2012, shortly after he stepped in his office past October. However its launch has been delayed up to this September because the Fund’s concept, as well as management and investment attraction mechanisms have been chiseled deliberately, Giorgi Bachiashvili, Director General of Co-Investment Fund, said during the presentation event. More than that, during this 10-month preparation period the authority worked on potential investment projects. Ten projects with USD 500 million total value and focused on energy, tourism, processing and agriculture sector are put under discussions at the moment. Among the Fund partner-investors are Abu Dhabi Group, Ras Al Khaimah Investment Authority from UAE, Milestone International Holdings from the People’s Republic of China, Batumi Industrial Holdings Limited an affiliation of the Kazakh state owned KazTransOil, State Oil Fund of Azerbaijan, Turkish-based Chalik Holdings, Mr. Alexander Moshkevich, also Estate of Badri Patarkatsishvili- the late Georgian tycoon, as well as Ivanishvili himself who plans to step down shortly after the Presidential election will be held by end of this October. Ivanishvili has already invested one billion USD or around 15% of the entire fund capital at the moment.
According to Bachiashvili, The fund is created to attract direct financial investments from both Georgian and foreign investors in commercial projects and duplicates the British model of management. It is registered as limited partnership legal entity and investors will not be involved in the management that be.
“A special management company set up in Georgia and staffed by high skill professionals with international experience will manage the Fund,” Bachiashvili elaborated. Six billion USD of the starting investment capital is expected to be boosted within five years in order to finance USD 10 billion worth projects in this period. The major purpose of the fund is to implement high-profit commercial projects that bear special importance for the state and insure long-term capital inflow in the country and attract only reputable [international] companies. At least 80% of the fund investments will be invested in Georgia whereas the remainder will be funneled into international projects that may bring profit to Georgia. The fund will not participate in saturated sectors but will only enter the sectors where the demand for the capital is high. However, it will never participate in speculative transactions related to trade of currency, real estate or raw materials. The fund will leave the financed projects during 7-9 years since its launch date through divesting its share to any of the partners or to strategic and financial investor. The third tool to hand the completed projects over will be Initial Public Offering at local or foreign stock exchanges.
Ivanishvili believes the newly established Co-Investment Fund together with the upcoming Venture Fund aimed at financing innovation projects, and the Sovereign Fund that will be based on the operation of Partnership Fund handling the state assets, will give a serious impetus to Georgian economy. According to him, construction of a new port with 110 million ton cargo turnover capacity is already put on the agenda of the Fund in order to enhance transit potential of Georgia.

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