Georgian fund makes first investment

Georgian fund makes first investment

Published: May 27, 2014

Georgian Co-Investment Fund buys Mktvari hydropower plant.

A US$6bn Georgian private-equity fund has completed its first investment, buying a local hydropower plant.

The Georgian Co-Investment Fund (GCF), led by chief executive George Bachiashvili and backed by initial investors including former Georgian prime minister Bidzina Ivanishvili, has spent US$98mn to buy and develop the Mktvari project, located in the country’s Akhaltsikhe region on the river Mtkvari, from Caucasus Energy and Infrastructure.

The plant should eventually have 53.3MW of installed capacity and is expected to be finished by the end of 2017. The first phase of construction, worth some US$22mn, is complete, and GCF is now starting the next.

Analysts at KPMG note that Georgia is the only net exporter of electricity in the region. Speaking with EMEA Finance after the Mktvari investment was announced, Irakli Menabde, GCF’s managing director for energy and infrastructure, explained the potential that exports have for the project.

“Mtkvari again boosts the profile of Georgia as a low-energy-cost country,” he says. “Given the fact that our structure of the off-take agreements is for about 20% to remain in Georgia and 80% to be exported into the Turkish electricity market, Georgia positions itself as adding capacity for the domestic market as well as developing its role as a local energy exporter. That’s a neat place to be.”

For more on the Mtkvari project and the full interview with GCF’s Irakli Menabde, see the forthcoming edition of EMEA Finance.