Tbilisi, Georgia, August 9, 2023—To help develop local capital markets and reduce greenhouse-gas (GHG) emissions in Georgia, IFC is anchoring an investment with a subscription of $10 million in a five-year $150-million bond issuance, the largest sustainability-linked bond in the country and the Caucasus region.
The bond issuer, Georgia Capital, is a Georgia-based investment holding with a diversified portfolio across sectors, including banking, pharmacy retail, health care, insurance, and renewable energy. The landmark transaction is expected to help Georgia Capital and its portfolio companies reduce their GHG emissions by 20 percent by 2027.
Georgia Capital and its portfolio companies are expected to achieve their targets by implementing energy-efficient measures. These include replacing natural gas heating systems with energy-efficient electric heating solutions, deploying electric vehicles, and shifting to renewable electricity. This will help support the country in achieving its Nationally Determined Contribution to reduce GHG emissions by 35 percent by 2030 compared to 1990.
Irakli Gilauri, JSC Georgia Capital CEO, said: "Despite the challenging global credit markets, we successfully priced the largest ever sustainability-linked bond offering in Georgia amid massive support from domestic and international investors. This issuance, with IFC's support, is key to the development of Georgia's local capital market, supporting its transition towards a more sustainable and lower-carbon economy." He added: "The demand for our bond shows rapid development of Georgia's capital markets, soon emerging as significant alternative sources of capital for Georgia Capital and our portfolio companies."
With tightening global financial conditions and soaring food and energy prices, IFC's anchor investor role will help inspire confidence among potential private sector investors, while highlighting the viability of sustainable finance instruments. As Georgia's corporate bond market is still emerging, the investment is expected to help boost Georgia's capital markets and foster sustainable practices.
Ivana Fernandes Duarte, IFC's Regional Manager for the South Caucasus, said: "Sustainability-linked bonds are a rapidly growing capital market instrument to support global sustainable development. This pioneering bond issuance in Georgia is expected to be exemplary in several ways, including finding ways to protect the environment through energy efficiency measures. We hope it acts as a catalyst, encouraging companies to align their activities with net-zero targets, driving inclusive and sustainable economic growth."
Listed on the Georgian Stock Exchange, the bond issuance is in line with the International Capital Market Association's sustainability-linked bond principles and international standards of sustainable finance.
IFC's investment in the bond issuance builds on its previous efforts to support the National Bank of Georgia in developing the country's Sustainable Finance Roadmap and Sustainable Finance Taxonomy, followed by IFC's anchor investment in Georgia's first green bond issuance by Georgian Renewable Power Operations in 2022.
About IFC
IFC—a member of the World Bank—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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About Georgia Capital
Georgia Capital is a platform for buying, building, and developing businesses in Georgia with holdings in sectors that are expected to benefit from the continued growth and further diversification of the Georgian economy. The Company's focus is typically on larger-scale investment opportunities in Georgia, which have the potential to reach at least GEL 300 million equity value over 3-5 years from the initial investment and to monetize them through exits, as investments mature. Georgia Capital currently has the following portfolio businesses: (i) a retail (pharmacy) business, (ii) a hospitals business, (iii) an insurance business (P&C and medical insurance); (iv) a renewable energy business (hydro and wind assets), (v) an education business and (vi) a clinics and diagnostics business; Georgia Capital also holds other small private businesses across different industries in Georgia; a 20.0% equity stake in the water utility business and a 19.8% equity stake (at 12-Jul-23) in LSE premium-listed Bank of Georgia Group PLC ("BoG"), a leading universal bank in Georgia. For more information, visit: www.georgiacapital.ge
