BGEO buys up rest of Georgian Global Utilities

BGEO Group announced on Thursday that its wholly-owned subsidiary JSC BGEO Investments has acquired the remaining 75% equity stake in Georgian Global Utilities for cash consideration of $70m.

The FTSE 250 firm said that as a result of the buy-out, it will own 100% of GGU, with the transaction expected to be both earnings and book value accretive from day one.

Its board described GGU as a privately-owned company that benefits from a natural monopoly, that supplies water and provides wastewater services through its wholly-owned subsidiaries to 1.4 million people, or one third of Georgia’s total population, in Tbilisi, Mtskheta and Rustavi.

GGU was privatised in 2008, with the terms of the privatisation including certain commitments by the government and the investor, parts of which have been discharges, with an expectation that the remaining commitments - primarily requiring the refurbishment of assets - will be discharged in 2018.

BGEO’s board said in a statement that it “believes that GGU operates in a stable regulatory environment”.

CEO Irakli Gilauri said he is delighted to announce the successful purchase of the remaining 75% stake in GGU.

“The buy-out of the remaining 75% of GGU fits into our strategy to acquire attractive businesses which can be monetized within a six year period, via an IPO or an M&A trade,” Gilauri explained.

“We remain committed to our principle of buying attractive businesses, and this purchase at a 4.2x EV / EBITDA multiple is expected to be earnings accretive from day one.”

Gilauri said the existing management team has delivered a strong improvement in the performance of GGU during the past year.

“This track record was important to our decision to step-up our investment and become the 100% shareholder of the business.

“I look forward to working with the GGU team to deliver its expected strategy and to grow the business with an aim to crystalize the value within 3-5 years,” Gilauri added.