Georgia Capital Would Rather Buy Itself Than Invest — And That's Now the Whole Strategy
Zero HoldCo debt, a freshly minted healthcare IPO exit route, and a 25% NAV discount turned into a $50m buyback: the private-equity fund that refuses to be a fee machine.
CGEO.L · Earnings Call · 2026-10-28
A holding company that stopped apologising for its discount
Georgia Capital's third quarter was, on the surface, a valuation print: net asset value per share up 13.6% quarter-on-quarter in lari, 15% in sterling, a record GEL 6.2bn gross portfolio, and NAV compounding of 21.4% a year since inception and 37% over three years. That is a good quarter in anyone's book. But the far more interesting content of the call is structural, not arithmetic: the company has now fully eliminated holding-company debt, is buying back roughly $400m of its own equity this year, and has started talking openly about what its businesses could hand back to it rather than what it could buy next. “this is the first quarter where we are reporting no debt at the HoldCo level” — Giorgi Alpaidze · 2026-10-28, CFO Giorgi Alpaidze said — the end of a journey from $365m of debt at the end of 2021 to zero, with $111m of liquid funds left after paying the final $50m tranche and roughly $50m of buybacks inside the same quarter. The NCC ratio — net capital commitment, the holding company's leverage gauge — has gone negative, the lowest in its history against a 42.7% peak. That frees the board to do the one thing it clearly prefers.The new KPI that quietly reframes the whole equity story
Buried in the middle of the deck was the most meaningful disclosure of the quarter, and it is a genuinely new line rather than a re-labelled one: Distributable capital, a business-by-business measure of cash left after interest, regular capex and the growth spending the companies actually need. Retail pharmacy threw off GEL 58m, up 36.6% year-on-year; insurance grew its distributable capacity by 38%; and across the private portfolio the companies paid GEL 53m of dividends while quietly generating GEL 88m of capacity. That gap is the punchline. “This GEL 35 million can easily become dividends paid to Georgia Capital next year or the year after” — Giorgi Berishvili · 2026-10-28, said insurance head Giorgi Berishvili, guiding dividend income to roughly GEL 200m for 2026 and “in excess of GEL 220 million for the next year” — Giorgi Berishvili · 2026-10-28. Why does that matter? Because it converts the dividend income line from a hope into an arithmetic loop. Cash flows up from the private companies, gets recycled into a stock trading at a wide discount, and NAV per share rises without new capital. Investors have spent years valuing this thing on sum-of-the-parts and then applying a holding-company discount to it. Management is now effectively short-circuiting the debate by being the buyer of that discount itself.The operating engine is not a rounding error
The private portfolio put up revenue growth of 18.5% and EBITDA growth of 26.3% year-on-year in the nine months, with the third quarter accelerating rather than fading — Irakli Gilauri's "acceleration squared" framing. The Retail Pharmacy business is the largest private asset: 476 pharmacies, roughly 34% of organised-trade market share, retail revenue up 16% in the quarter on 8.7% same-store growth, EBITDA up 34% with the margin at 12.7%, and leverage down to 0.8x from 1.3x against a 1.5x target. It also bought a premium baby-care distributor for GEL 6m at 3.5x EV/EBITDA — small, cheap, and exactly the sort of bolt-on that pads gross margin. Network expansion is where the growth story gets slightly more honest than most. Asked to split Armenian pharmacy growth between existing operations and new stores, Tornike Nikolaishvili attributed 75% to the existing base — brands, wholesale, state tenders — and only 25% to new outlets. Armenia is smaller in margin terms too, around 32% retail gross margin versus 35% in Georgia. That is a useful admission: the growth is being earned, not just built. Healthcare services is the other engine, with revenue up 16%, EBITDA up 22% to GEL 26m, outpatient revenue up 23% and now 48% of net revenue, and operating cash flow more than doubling. But note the cash conversion discussion, which is where the scepticism belongs. Pharmacy conversion was 63% in the quarter and 87% for nine months, with management guiding to about 90% for the full year; healthcare conversion was flattered by delayed state collections catching up. When an analyst pressed on the quarterly number, the answer was blunt: “I do not think you could look at the quarter. I mean it's a cash conversion.” — Irakli Gilauri · 2026-10-28 Fair — but it cuts both ways, and the annual figure is the one to hold them to.A new word appears: exit route
For a company that has spent years talking about NAV and buybacks, the freshest language on this call was the plan to relist the healthcare business. Management sketched an IPO in three to five years at an EBITDA threshold of “$80 million to $100 million EBITDA mark, that's where we would consider the listing” — Irakli Gilauri · 2026-10-28, funded by GEL 53m of capex over three years, GEL 10m of it from the HoldCo and the rest from the company's own cash. The stated logic is to push the business away from state-tender revenue toward higher-return private work — IVF, outpatient, diagnostics — where returns on capital can clear 20%. This is a exit route that did not exist in prior quarters' framing, and it reframes healthcare from "another portfolio company" into a future listed asset with a valuation event attached. It also introduces a new dependency: a GEL 53m spend that produces no distributable capital in 2026 and only a small amount in 2027.The contrast worth holding onto
Here is the tension. Globally, listed alternative managers have been de-rated hard: fee related earnings, fee paying AUM and "Private Equity business" all sit among the worst-performing financial themes in the trailing-year price tape, with the private-credit and asset-based-finance complex down mid-to-high teens. Georgia Capital trades in that same discounted-alternatives bucket — more than 25% below NAV on management's number, roughly 35% on a gross basis. Its response is not to promise a re-rating or a bigger fund. It is to refuse the fee-machine identity altogether:That is a rare thing to hear on an earnings call, and it is the actual thesis. The buyback program is not a consolation prize for a lack of deal flow; it is the declared first-choice use of capital, with roughly a quarter of the GEL 1bn return programme already done or committed and 37% of share capital retired since inception. The risk is obvious: a portfolio where Lion Finance Group has grown to 51% of gross value after a 27% quarterly share-price rally, and where the private companies' value creation is increasingly tied to EBITDA momentum that has to keep accelerating. But the far more defensible part — zero HoldCo debt, GEL 111m of liquidity, and rising upstream dividends — is now in place. The company has stopped asking to be trusted on its discount and started buying it.We are a private equity fund, which has to invest in order to earn the fees for the managers. We don't have to invest... Everybody is thinking that if we don't invest, we die, we don't die.