BGEO board approves demerger, to up stake in Bank of Georgia

BGEO Group said on Monday that its board has approved the demerger announced last July and that its investment business, Georgia Capital, plans to increase its stake in Bank of Georgia to 19.9%, from the previously announced 9.9%.

The board has approved the demerger that will separate the group into twoLondon-listed businesses, with Bank of Georgia being the banking arm and Georgia Capital the investment business.

“We expect the demerger to benefit both businesses in several ways: providing greater flexibility for each business to pursue value creation opportunities appropriate to its focused strategies, harnessing different capital structures, and allowing tailored and effective management and human resource approaches.

“The board believes that the demerger is the best way to enable the individual businesses to grow faster and develop independently over the next few years.”

The demerger will be subject to shareholder approval at a general meeting which is expected to be held in April.

As far as the increase in the Bank of Georgia stake is concerned, BGEO said: “In seeking to achieve the best outcome in terms of combined valuation for current BGEO shareholders, it is important that the demerger creates two entities that are well-capitalised, have enough liquidity to be attractive to a broad investor base, and are sizeable enough for both Bank of Georgia and Georgia Capital to achieve FTSE 250 index inclusion following the demerger.”