By Andrei Skvarsky.
Russia’s Renaissance Capital has released one more upbeat research piece about Georgia, calling it “one of our favoured frontier markets” and saying it “remains our destination of choice for investors looking at the Former Soviet Union”.
“With the Georgian election cycle over and political situation stable, and an almost immediate GDP recovery of 7.1% YoY growth in 4Q13 and 1Q14, Georgia remains our destination of choice for investors looking at the Former Soviet Union,” the Moscow-based investment bank’s head of research David Nangle and analyst Armen Gasparyan said in their study.
“These recent positives feed off a well-diversified, small and open economy that prides itself on being committed to reform and ease of doing business.”
The piece focused on TBC Bank, one of Georgia’s top two lenders and “an attractively valued vehicle to gain exposure to Georgia.”
“TBC is a pure Georgian play and a classic universal bank. It targets being Georgia’s no. 1 bank for retail, micro and SME [small and midsize enterprises], and to maintain a leading role in the corporate space,” Nangle and Gasparyan said.
Georgian businessmen Mamuka Khazaradze and Badri Japaridze, who founded TBC in the early 1990s, today own 22% of the lender with the remainder spread among international financial institutions and institutional investors. The latter bought TBC shares during the IPO in the second quarter of 2014, the analysts said.
Though there are 21 banks in Georgia, in effect Georgian banking is a duopoly, with about 60% of the system dominated by TBC and Bank of Georgia, both of which are listed on London Stock Exchange.
In a later note, Nangle and Gasparyan compared the performance of TBC and Bank of Georgia but said: “We like both, rate both BUY – we have no strong preference here.”
Nangle and Gasparyan, who is RenCap’s analyst for Russia, the Commonwealth of Independent States and Europe, speak highly of Georgia’s banking system, which “benefits from a strong regulator, low penetration levels, and a strong economic tailwind”.
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