Investor Presentaiton
Acquisition of a minority interest in GGU | an Attractive Investment Opportunity
Exit strategy through
potential IPO is feasible
Strong potential for value
generation for shareholders
in short term
Strong management and
streamlined operations but
room for potential further
improvement exists
Transaction Rationale
A profitable company with
significant capacity for
growth
Attractive
Investment
Opportunity
A natural monopoly
.
•
Cash generating business,
no additional financing
required for planned capex
Potential to improve
utilisation
Transaction Overview
•
Company Overview
Georgian Global Utilities Ltd. (“GGU") is a privately owned company that
supplies water and provides wastewater services to 1.4 million people
(approximately 1/3 of Georgia's total population) in Tbilisi, Mtskheta and Rustavi
and operates hydropower electricity generation facilities
Sales to corporates represented c.70% of water revenue
GGU owns and operates 3 hydropower generation facilities with a total capacity of
143MW
Most of the milestones committed to the authorities during the privatization have
already been achieved with one project remaining before 2018
No additional equity financing is required for planned Capex program
Selected Financials
•
Transaction to be structured in several steps
Revenue Dynamics(4)
(GEL'm)
125.3
106.1
108.7
116.0
98.7
Acquisition of 25% shareholding for GEL48.7m (US$26m)
Attractive valuation with GGU valued at EV/EBITDA 2014E deal multiple of
4.7x, while industry peers are trading at 8.5x average EV/EBITDA 2014E
multiple(3)
BOGH provided a US$25mn loan to GGU with proceeds to be paid as dividend to
the selling shareholders
.
The transaction was earnings accretive
•
Commercial terms have been agreed, transaction will be subject to certain
conditions
2010
EBITDA Dynamics (4)
(GEL'm)
2011
2012
2013
2014
56.8%
52.5%
H
56.1
44.3%
48.2%
41.2%
55.7
48.2
55.9
51.6
2010
2011
2012
2013
2014
Holding company of BANK OF GEORGIA
BGEO www.bgeo.com
(1)
Source: Company information. Conversion form USS to GEL was done using current exchange rate as at 27 November, 2014 for the consideration amounts.
Net of accrued interest and dividends for the second tranche.
(2)
Market Capitalisation as of 1 December 2014.
November 2015
(3)
GROUP
(4)
Universe of comparable companies includes Pennon Group. Acea, Artesian Resources, American State Water Company, Athens Water and Thessaloniki Water Supply.
Group companies' unconsolidated IFRS financial statements.
page 47View entire presentation