BG Capital welcomes possible IPO of state owned enterprises

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The intention to float minority stake of several major state-owned enterprises onto stock exchanges has been hinted at by local government officials several times. However, the prime minister of Georgia’s announcement was the first real step in this direction, says BG Capital, the wholly-owned investment arm of the Bank of Georgia that offers a full range of investment services.

On August 10, at a government session, the ministers discussed possible legislative amendments to pave the way for the initial public offering of 15% or up to 25% of stakes of several of the major state-owned enterprises on the London and Warsaw stock exchanges.

“The portfolio investors’ interest in Georgia remains high and new public companies will allow them to diversify their investments in different sectors of the Georgian economy,”   Akaki Gelashvili, Analyst at BG Capital told Georgia Today adding that “it may also encourage IPOs from private companies down the line.”

The Georgian state’s controlling stakes in the following companies: Georgian Railways; Georgian State Electric System (which operates the power grid throughout the country); the Georgian Oil and Gas Corporation (GOGC), which also operates the North-South Gas Pipeline transporting gas from Russia to Armenia via Georgia; as well as the government’s 24.53% stake in Telasi, the provider of electricity in the capital Tbilisi, are believed to be considered for IPO.

According to Georgian Prime Minister Nika Gilauri, the IPO of state-owned enterprises will allow the country to attract additional foreign investment. As he noted during the discussion of the proposed legislative amendments, “the situation on the international stock exchanges is not favorable right now, but confidence towards Georgia has not [declined]. On the contrary, it has increased.”

By Tamar Khurtsia

18.08.2011