The Finance Wunderkind Who Could Put Georgia on the Map
WHY YOU SHOULD CARE
Because this fund could turn a flagging economy around.
George Bachiashvili always seems to get ahead of himself. He started school at 4, opened his first business (an Internet café) at 13 and finished high school at 15. But with his more recent spate of successes, there’s been a certain stately sugar daddy behind him: Bidzina Ivanishvili, the richest man in Georgia, who a few years ago rose to power as the country’s prime minister. The pair go back several years, to when Bachiashvili joined the billionaire’s investment office in Russia. He swiftly got promoted to group CFO before leading in the sale of six companies valued at more than $1.5 billion. He was 28 years old. “Despite his relatively young age, he had an ability to give me a very short and to-the-point opinion on different business-related matters,” Ivanishvili recently told OZY via email.
Hardly known to the rest of the world, Bachiashvili (pronounced BAKE-ee-ash-villy) has since been thrust into a rather crucial role for his home country as chief executive of the $6 billion Georgian Co-Investment Fund, one of the region’s biggest private equity funds. Now 30, the wunderkind’s running what many locals hope will boost this nation’s flagging economy. In 2015, the World Bank expected Georgia’s GDP to grow just 2 percent, down from 4.7 percent in 2014, while the jobless rate improved but still topped 12 percent — much higher than in the EU or U.S. Enter the sovereign wealth funds and major corporations looking to pay for opportunities in this part of the world, and from where Bachiashvili says he’s squeezed around $2 billion in commitments for deals in hydropower, greenhouses and Panorama Tbilisi, one of Georgia’s biggest real estate plays involving hotels, apartments and offices linked by cable cars that would crisscross the capital.
But still, this landmark fund hasn’t avoided all controversy. As it turns out, it launched over a month before Ivanishvili voluntarily stepped down in 2013, after about a year as prime minister; when he was still in office, he was named the fund’s single biggest investor, with a commitment of $1 billion. Critics say the fund’s size — equivalent to about 40 percent of Georgia’s GDP — combined with its close links to a former leader in a country where the lines between business and government have been known to blur has raised concern. “The question is not so much in the credentials in this young man [Bachiashvili], but whether or not this fund is conducting itself transparently,” says Yaroslava Babych, who teaches at the International School of Economics at the local Tbilisi State University.
Some local businessmen see him as being on the fast track to power, possibly in politics.
Yet the young Bachiashvili, who has fast become the face of big investment and international business in Georgia, dismisses these concerns and says the fund doesn’t participate in projects financially supported by the government. “We never have secrecy about what we do, how we do it or how we invest,” he says, noting investment deals are often published on the fund’s website. While Skyping from the picturesque, cobblestoned capital of Tbilisi, with a clean-shaven face and neat hair, he discusses luring wealthy investors from the United Arab Emirates, Turkey and China, not to mention his hometown billionaire buddy. “I had the personal touch,” Bachiashvili says, with a nod to connections made several years ago while earning his MBA at INSEAD.
It also helped, of course, that Bachiashvili worked for a couple of years at the Dhabi Group, a UAE-based investment fund that was named one of the Georgian Co-Investment Fund’s major investors when it launched. Yet most of the fund’s backers are historically old trade and business partners for Georgia: After the European Union, which leads trade with Georgia at 26 percent, a lot of the country’s trade takes place with Turkey or Azerbaijan, though countries including Kazakhstan and the UAE have long held bilateral trade and economic agreements.
Bachiashvili, the son of two surgeons, says he got into this world because finance “was in high demand.” And some local businessmen see him as being on the fast track to power, possibly in politics. Fady Asly, chairman of the International Chamber of Commerce in Georgia and head of Agritechnics Holding, an import and distribution company, says Bachiashvili could be appointed finance minister “any time, considering that some of the ministers of the economic team are not as competent as he is.” Meanwhile, his mentor, Ivanishvili, says it’s been an asset having this young protégé around, because “it is very important to have someone that I trust who can give me an unbiased, clear picture of matters at any point in time.”
Now focusing his attention on Georgia, Bachiashvili sees an opportunity where others see risk. “It’s very interesting doing private equity in a frontier market because almost every project you do is new for the country,” he says. Some of those high-tech deals include a $45 million dairy farm and processing plant in West Georgia with a Dutch company called the Friesian, which has the ability to produce 50 tons of milk per day. “The technology you bring has an impact on the whole country,” he says.