Sparks - Georgia Capital

Georgia Capital reported its Q226 results today, posting strong quarter-on-quarter NAV per share growth of 13.1% in Georgian lari (GEL) terms (15.6% in sterling terms), translating into a five-year NAV per share growth to end-June 2026 of 26.3% per year. Performance in Q226 was driven by the share price appreciation of Lion Finance Group (which added 9.4pp to the return), operating performance of its private large companies (2.4pp) and fx and multiple change within the private large portfolio (2.2pp). Its three large private holdings in the retail (pharmacy), insurance and healthcare sectors delivered strong revenue and EBITDA growth of 19.1% and 21.2% y-o-y, respectively, in Q226 (16.4% and 23.9% y-o-y in H126). Growth was also healthy relative to the solid economic momentum in Georgia, where real GDP grew by 7.0% y-o-y (11.8% in nominal terms) in Q226, based on preliminary estimates. Georgia Capital expects around GEL200m of dividend income from its holdings in 2026 (of which it already recorded GEL86.3m in H126), compared to its previous assumption of at least GEL200m.

Aggregate net operating cash flow across the large private portfolio increased by a strong 41.4% y-o-y in Q226 (36.2% y-o-y in H126), resulting in an aggregate cash balance of GEL254m at end-June 2026, up 6.8% q-o-q and 21.1% y-o-y. Georgia Capital’s holding-level liquidity went up substantially in Q226 as well, from $85m at end-March 2026 to $196m (including accrued dividends from Lion Finance Group) at end-June 2026, driven by a partial sell-down of its Lion Finance Group shares (which reduced its stake from 16.6% at end-March 2026 to 14.9% at end-June 2026) as part of its passive foreign investment company (PFIC) risk-management strategy, dividend income from its portfolio, as well as proceeds from the disposal of its housing development business as part of its focus on capital-light businesses (partially offset by continued buybacks). As a result, Georgia Capital’s net capital commitment ratio fell to a record-low level of -2.9% at end-June 2026 (compared to its through-the-cycle target of 10%). The sale of the housing development business also resulted in a fall in aggregate net debt across Georgia Capital’s emerging and other businesses (excluding the renewable energy business) by 49% and, in turn, an improvement in their net debt/ EBITDA ratio from 3.8x to 2.0x (across Georgia Capital’s total private portfolio, leverage declined from 2.5x at end-March 2026 to 2.1x at end-June 2026).

Georgia Capital’s pro-forma liquidity stands at $124m after accounting for the early full redemption of its $50m outstanding local sustainability-linked bonds (to be settled on 19 August 2026), which will make Georgia Capital debt-free at the holding level, and the $10m extension of its buyback programme. These measures will allow Georgia Capital to complete its GEL700m capital return programme significantly ahead of the original schedule, which assumed completion by end-2027. It has announced a new GEL1bn capital allocation programme through the end of 2029, with an initial $50m buyback and cancellation programme (once the existing programme is completed). Its robust financial position is reflected in the recent corporate credit rating upgrade by S&P Global Ratings to BB (stable) from BB- (positive), which is now in line with Georgia’s sovereign rating.