Still trying to get a handle on the fundamentals of CGEO and the impacts of political turbulence in Georgia. Its CEO has been linked with sanctions in the US and now its independent NED divests 96% of his options. Does anyone know if the situation is worsening in Tbilisi? https://simplywall.st/stocks/gb/diversified-financials/lse-cgeo/georgia-capital-shares/news/georgia-capital-independent-non-executive-director-neil-jani/amp |
 (NB. Posting this again with hopefully better formatting):
Here's the Telegraph article on CGEO's CEO Irakli Gilauri FYI - can see a response from the Board on their site but nothing further from US State Dept re: sanctions. Anyone seen different?
Irakli Machaidze, The Telegraph:
Georgia’s drifts towards authoritarianism has repercussions for the London Stock Exchange
What happens in the Caucasus is no longer confined to a distant and too often overlooked region of Europe
Georgia, until recently a source of economic optimism on the troubled fringes of Europe, has elected to follow an anti-democratic path towards Moscow. The ruling Georgian Dream party has effectively halted the country’s EU accession talks, triggering political unrest, Western sanctions and mounting investor anxiety.
The TV images of protesters being beaten are heartbreaking. But while international media has focussed on democratic backsliding, a parallel threat is arising for foreign businesses and investors, particularly those invested in nominally “safer” stocks on indices like the London Stock Exchange.
New names are being added to international sanctions lists all the time. Alongside already sanctioned government ministers, there now appear names of leaders of large U.K. based companies, including firms listed on the LSE. These individuals are being outed as “enablers̶1; and beneficiaries of authoritarian practices, and they are facing potential sanctions in the US and elsewhere.
Three London-listed Georgian firms, Bank of Georgia Group PLC, TBC Bank Group PLC, and Georgia Capital PLC, serve as barometers of the country’s volatility. Since April 2024, when the Georgian government revived it push for a Russian-style foreign agents law, these companies’ share prices have plummeted by an average of 10 to 15 per cent. Georgia’s parliamentary elections in October, widely condemned as fraudulent, triggered a further 10 per cent fall. Political turmoil is manifesting in financial instability, prompting Fitch Ratings to downgrade Georgia’s outlook from “stable” to “negative̶1;
Sanctions on political elites undermine investor confidence, especially in nations dependent on foreign investment. While U.S. sanctions against Georgian Dream founder Bidzina Ivanishvili aim to limit his influence, they have a broader effect. As Georgia becomes geopolitically isolated, its economic reliance on Russia and non-Western actors will only increase.
Compounding these risks, Georgia has refused to join Western sanctions against Russia, fuelling suspicions it is facilitating sanctions evasion. Former US sanctions coordinator James O’Brien has raised concerns that Georgia is bolstering Russia’s military supply chain, claims substantiated by investigative journalists working in Georgia.
Meanwhile, the National Bank of Georgia has implemented a rule that shields sanctioned individuals from international restrictions: the Bank will only enforce sanctions if a local court has found an individual guilty, an unlikely outcome given Georgian Dream’s control of the judiciary.
Western sanctions-setters want to close loopholes by targeting businesses that back the Georgian government. The most high-profile target to date is Irakli Gilauri, Chairman and CEO of Georgia Capital PLC. A recent letter from the US House of Representatives, obtained by Radio Liberty, urged US Secretary of State Marco Rubio to impose sanctions on individuals accused of “enabling̶1; Bidzina Ivanishvili, naming Gilauri among them.
This matters because Georgia Capital holds a 20 per cent stake in Bank of Georgia, another LSE-listed Georgian giant. Sanctioning the likes of Gilauri will inevitably shake investor confidence in the governance of Georgian firms with global ties.
Irakli Gilauri just happens to be the brother of Nika Gilauri, formerly a key figure in the Georgian government and prime minister of Georgia from 2009 -2012. Both Georgia Capital and Nika Gilauri, now a vocal opposition figure, have condemned the inclusion of Irakli Gilauri in the list as “a discrediting operation”.
But the attention on Irakli Gilauri goes beyond his political affiliations. His record in management is blotted by legal disputes, including a current case involving the British Georgian Academy, Georgia’s leading international school, accredited by the Council of British International Schools (COBIS).
The dispute centres on allegations that Gilauri and Georgia Capital failed to fulfil investment commitments after acquiring a 70 per cent stake in the school. Its founder, Natia Janashia, accuses Gilauri and his associates of fraud. Following a legal battle in Tbilisi, the court granted her relief against Georgia Capital’s attempts to remove her. With the legal dispute now heading to the high court in London where Georgia Capital is listed, further revelations about Gilauri’s management practices are likely to follow.
If sanctions against business leaders like Irakli Gilauri do materialise, the flight of capital from Georgia could accelerate rapidly. More broadly, the increasing alignment of Georgian institutions with pro-Russian policies raises serious concerns about the sustainability of investments there. Investors in London must grapple with the risks posed by a government that is willing to sacrifice its Western economic ties in pursuit of political consolidation in Russia. Caveat emptor. |
Here's the Telegraph article on CGEO's CEO Irakli Gilauri FYI - can see a response from the Board on their site but nothing further from US State Dept re: sanctions. Anyone seen different? Irakli Machaidze, The Telegraph: Georgia's drifts towards authoritarianism has repercussions for the London Stock ExchangeWhat happens in the Caucasus is no longer confined to a distant and too often overlooked region of EuropeGeorgia, until recently a source of economic optimism on the troubled fringes of Europe, has elected to follow an anti-democratic path towards Moscow. The ruling Georgian Dream party has effectively halted the country's EU accession talks, triggering political unrest, Western sanctions and mounting investor anxiety.The TV images of protesters being beaten are heartbreaking. But while international media has focussed on democratic backsliding, a parallel threat is arising for foreign businesses and investors, particularly those invested in nominally "safer" stocks on indices like the London Stock Exchange.New names are being added to international sanctions lists all the time. Alongside already sanctioned government ministers, there now appear names of leaders of large U.K. based companies, including firms listed on the LSE. These individuals are being outed as "enablers" and beneficiaries of authoritarian practices, and they are facing potential sanctions in the US and elsewhere.Three London-listed Georgian firms, Bank of Georgia Group PLC, TBC Bank Group PLC, and Georgia Capital PLC, serve as barometers of the country's volatility. Since April 2024, when the Georgian government revived it push for a Russian-style foreign agents law, these companies' share prices have plummeted by an average of 10 to 15 per cent. Georgia's parliamentary elections in October, widely condemned as fraudulent, triggered a further 10 per cent fall. Political turmoil is manifesting in financial instability, prompting Fitch Ratings to downgrade Georgia's outlook from "stable" to "negative"Sanctions on political elites undermine investor confidence, especially in nations dependent on foreign investment. While U.S. sanctions against Georgian Dream founder Bidzina Ivanishvili aim to limit his influence, they have a broader effect. As Georgia becomes geopolitically isolated, its economic reliance on Russia and non-Western actors will only increase.Compounding these risks, Georgia has refused to join Western sanctions against Russia, fuelling suspicions it is facilitating sanctions evasion. Former US sanctions coordinator James O'Brien has raised concerns that Georgia is bolstering Russia's military supply chain, claims substantiated by investigative journalists working in Georgia.Meanwhile, the National Bank of Georgia has implemented a rule that shields sanctioned individuals from international restrictions: the Bank will only enforce sanctions if a local court has found an individual guilty, an unlikely outcome given Georgian Dream's control of the judiciary.Western sanctions-setters want to close loopholes by targeting businesses that back the Georgian government. The most high-profile target to date is Irakli Gilauri, Chairman and CEO of Georgia Capital PLC. A recent letter from the US House of Representatives, obtained by Radio Liberty, urged US Secretary of State Marco Rubio to impose sanctions on individuals accused of "enabling" Bidzina Ivanishvili, naming Gilauri among them.This matters because Georgia Capital holds a 20 per cent stake in Bank of Georgia, another LSE-listed Georgian giant. Sanctioning the likes of Gilauri will inevitably shake investor confidence in the governance of Georgian firms with global ties.Irakli Gilauri just happens to be the brother of Nika Gilauri, formerly a key figure in the Georgian government and prime minister of Georgia from 2009 -2012. Both Georgia Capital and Nika Gilauri, now a vocal opposition figure, have condemned the inclusion of Irakli Gilauri in the list as "a discrediting operation".But the attention on Irakli Gilauri goes beyond his political affiliations. His record in management is blotted by legal disputes, including a current case involving the British Georgian Academy, Georgia's leading international school, accredited by the Council of British International Schools (COBIS).The dispute centres on allegations that Gilauri and Georgia Capital failed to fulfil investment commitments after acquiring a 70 per cent stake in the school. Its founder, Natia Janashia, accuses Gilauri and his associates of fraud. Following a legal battle in Tbilisi, the court granted her relief against Georgia Capital's attempts to remove her. With the legal dispute now heading to the high court in London where Georgia Capital is listed, further revelations about Gilauri's management practices are likely to follow.If sanctions against business leaders like Irakli Gilauri do materialise, the flight of capital from Georgia could accelerate rapidly. More broadly, the increasing alignment of Georgian institutions with pro-Russian policies raises serious concerns about the sustainability of investments there. Investors in London must grapple with the risks posed by a government that is willing to sacrifice its Western economic ties in pursuit of political consolidation in Russia. Caveat emptor. |
I've just bought shares in Georgia Capital (BGEO) and then saw this - https://www.telegraph.co.uk/news/2025/02/12/georgia-authoritarianism-uk-investments-caucasus/Is BGEO on a sanctions list? Does anyone know what this means for investors? |
Bank up 9% today. Capital only up 3% today. Trade accordingly... :) |
I have reduced my holdings in both CGEO and BGEO because of the concerns surrounding GD and the pivot away from joining the EU and becoming more aligned with Russia but still maintain small stakes in both which without the political risk are both undervalued. |
This fund is so easy to trade for profit it's silly.
When the bank spikes in the morning, it takes the market until the afternoon to remember that CGEO's share price = its stake in BGEO and the share price of CGEO also goes up. |
Only if CGEO keeps it on the balance sheet (does it?). I assumed it was just eaten up as “expenses.R21; |
Good point.CGEO presumably receive the divi tho so will ultimately be reflected in the value, arguably more tax efficiently? |
yeh, but BGEO would be affected as well so your argument doesnt stand up |
I know that Georgia has its risks...
But BGEO makes up nearly £9 of CGEO's NAV, with a £10 share price. £1 for £13 of Georgian private assets? Seems like an added margin of safety versus investing directly in the bank? |
Worth a read.
hxxps://capital.com/georgian-lari-forecast#:~:text=The%20Georgian%20economy%20is%20driven,the%20value%20of%20the%20lari. |
The Georgian currency is a very big risk here and if the GEL was to return to the same average exchange rate against the USD and GBP as in 2021 then these shares would fall by about 30%
In May 2021 the USD bought 3.45 GEL but it only buys about 2.75 now
And in May 2021 the GBP bought about 4.80 GEL but it only buys about 3.50 now
There does not seem to be any good reason for this huge rise in the GEL gainst the USD and GBP in the last 3 years and so it is likely that the GEL will return to a more normal level against these currencies
This would mean a fall of about 30% in the shares |
Can't understand what has happened in the last two weeks. Is it just the political issue? |
Georgia capital features in the above article and the shares will be benefitting today from B of G's continued strong rise. |
Continued progress with the share price currently at a 50% discount to NAV at Dec 23 and that is likely to have increased further following Bank of Georgia's recent share price increase as a result of the proposed purchase of bank of Armenia for 0.65 of book value and 2.6 x P/E 2023. |
Also in December’s report – and in the month Georgia was granted EU candidacy status – we look at the surge in popularity with Elite Investors of some of the country’s leading financial businesses. London-listed Bank of Georgia (GB:BGEO), TBC Bank (GB:TBCG) and Georgia Capital (GB:CGEO) have all gained AAA ratings during 2023. Read more. |
 Nick Greenwood-
Georgia
Georgia has made significant progress over the past decade, with its GDP per capita increasing by 55% from 2011 to 2021. Despite an improved economic outlook in recent years, investor appetite for Georgia has been muted, with sentiment impacted further by Russia’s invasion of Ukraine last year – which stoked memories of the conflict between Russia and Georgia in 2008.
As a result of the Russian invasion of Ukraine, many highly skilled Russians, particularly IT professionals, have moved across the border to Georgia. This has given the economy a further recent boost. Nevertheless, with non-existent demand for Eastern European strategies in recent years, the country remains firmly out of the investor spotlight. While there may be no near-term catalyst for Georgia, the significant valuation mispricing is simply too compelling to overlook.
We have a position in the London-listed Georgia Capital (CGEO), which was spun out of Bank of Georgia after the combined entity became too large to manage at 16% of GDP. The portfolio has investments in various areas such as wine, motor insurance, education, renewable energy, water supply and its listed stake in the Bank of Georgia. With a current discount of 60% – this represents a major mispricing opportunity, given our optimism in the country’s internal dynamics. |
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