Georgia Country Co-Investment Fund: Driving Economic Growth and Innovation

Georgia has become a magnet for overseas investors and business pioneers in recent years. At the epicenter of Georgia’s flourishing investment climate is the Georgia Country Co-Investment Fund (GCF). This article illuminates how the GCF is propelling economic expansion and technological creativity across Georgia.

Understanding the Georgia Country Co-Investment Fund

The Georgia country co-investment fund was launched in 2019 with backing from the Georgian government and several major international finance institutions. The fund has $500 million allocated to co-invest in ventures proposed by foreign investors looking to enter or expand in the Georgian market. 

The co-investment model enables the fund to partner with global brands to establish new enterprises in Georgia. The fund provides local knowledge, regulatory support, and financial backing while investors contribute world-class expertise, technology, and access to international markets.

Reasons Why Co-Invest in Georgia

Georgia is an increasingly attractive market for international businesses due to its strategic location, business-friendly regulations, and wealth of investment opportunities across sectors:

Strategic Location: Situated at the crossroads between Europe and Asia, Georgia provides access to regional markets with over 1 billion potential customers. Its ports on the Black Sea offer connectivity to global maritime trade routes.

Business Environment: Georgia country co-investment fund consistently ranks among the easiest places in the world to do business. The government has implemented reforms to cut red tape and encourage foreign investment. Tax rates are low, and Georgia has free trade agreements with major partners like the EU.

Investment Opportunities: Major projects are emerging in areas like infrastructure, manufacturing, tourism, agriculture, and energy. Co-investing enables foreign firms to capitalize on Georgia’s growth potential. The fund provides local expertise to help navigate the investment landscape. 

Competitive Costs: Georgia has competitive operating costs coupled with a highly educated, multilingual workforce. The country’s unit labor costs are among the lowest in the region.  

Lifestyle Appeal: Georgia’s unique culture, cuisine, winemaking traditions, and stunning mountainous scenery make it an appealing lifestyle destination for employees. So, the low cost of living allows for a high quality of life.

The Objectives of Georgia Country Co-Investment Fund

Here are some of the key objectives of the Georgia country co-investment fund:

• Attract foreign direct investment into Georgia: The fund aims to bring in reputable international companies to invest in and create new enterprises in Georgia. This provides capital, expertise, and access to global markets.
• Upgrade Georgia’s competitiveness: By co-investing in priority sectors, the fund helps Georgia move up the value chain and develop competitive advantages in fields like manufacturing, tourism, and agriculture.
• Support economic diversification: The fund targets opportunities beyond Georgia’s traditional industries to diversify its economic base for sustained future growth.
• Create quality jobs: Co-investment projects are expected to generate thousands of new local jobs across skill levels from operators to engineers.
• Upgrade infrastructure: The fund co-invests in strategic infrastructure like roads, ports, and energy grids to strengthen Georgia’s business environment.
• Drive innovation: Partnering with global firms facilitates knowledge and technology transfer into Georgia through new production processes, services, and products.
• Increase foreign capital inflows: The co-investment mechanism mobilizes billions in direct investment from the fund’s international partners.
• Catalyze development: The projects financed are expected to have spillover benefits across sectors by stimulating supply chains, distribution channels, and supporting industries.
• Signal Georgia is “Open for Business”: The success of the fund highlights Georgia’s investor-friendly climate and the opportunities available to attract foreign capital.

By meeting these strategic objectives, the Georgia country co-investment fund can support sustainably high growth and position Georgia as an emerging regional economic leader.

The Co-Investment Process

The Georgia country co-investment fund was designed to be simple for international investors. The fund works closely with its partners through each phase:

1. Initial Proposal: An investor submits a proposal detailing their project vision, capital requirements, timeline, and the role requested from the fund. 
2. Due Diligence: The fund thoroughly vets the investor and project potential before approving a partnership. Factors assessed include financials, management expertise, strategic rationale, and economic impact.
3. Investment Agreement: Following approval, an agreement is made defining the co-investment terms between the fund and the investor. Typically, the fund provides 30-50% of required capital.
4. Implementation: With funding secured, the investor establishes operations in Georgia. The fund helps clear regulatory hurdles, provides local staffing support, and facilitates access to incentives.  
5. Ongoing Monitoring: The fund keeps close contact with co-invested enterprises to track progress and support expansion over time. The fund may take board seats or observer positions.
6. Exits: As projects mature, the fund will work with investors on exit strategies including IPOs, acquisitions, or secondary sales of equity stakes.

The streamlined process allows the Georgia country co-investment fund to mobilize its capital rapidly and deliver on high-potential ventures.

Key Sectors Targeted for Co-Investment 

The Georgia country co-investment fund is sector-agnostic but has identified core priority industries based on Georgia’s strengths and development goals:

Infrastructure

Georgia needs considerable investment in roads, rail, ports, airports, pipelines, and energy grids to support its growing economy. Co-investments in infrastructure can capitalize on Georgia’s strategic geographic position.

Manufacturing

Georgia aims to move up the value chain in manufacturing beyond traditional areas like autos, steel, and chemicals. The fund targets electronics, pharmaceuticals, and precision engineering.

Tourism

Georgia’s mountains, wine region, and Black Sea resorts attract growing numbers of visitors. Opportunities exist across hotels, ski resorts, entertainment venues, restaurant chains, and travel services.

Agriculture

Georgia’s ideal climate allows for diverse agriculture production from nuts and fruits to tea and spices: agro-processing, cold storage, distribution, and packaging present co-invest openings.

Renewable Energy

Abundant hydropower resources and untapped solar, wind, geothermal, and biomass potential make Georgia’s energy sector ripe for co-investments in generation and distribution.

The fund considers strong proposals in any industry but expects these five sectors to be areas of emphasis. The high growth and strategic importance of these sectors make them natural targets.

Key Achievements of the GCF

Since its inception, the Georgia country co-investment fund has made notable contributions to the Georgian economy. Some of its key achievements include:

Infrastructure Development: 

The Georgia country co-investment fund has played a pivotal role in attracting investments for critical infrastructure projects, such as energy and transportation. These initiatives have not only improved connectivity within the country but have also enhanced Georgia’s regional trade relations.

Job Creation: 

The Georgia country co-investment fund’s approach has catalyzed the opening of thousands of new jobs spanning multiple industries. This influx of employment opportunities has uplifted national hiring levels and supported poverty reduction efforts across Georgia.

Innovation Ecosystem: 

By supporting innovative startups and technology-driven businesses, the Georgia Country co-investment fund has helped nurture a vibrant innovation ecosystem in Georgia. This has led to the emergence of successful homegrown companies and has positioned Georgia as a regional hub for technology and entrepreneurship.

Results Achieved So Far

Despite only being launched in 2019, the Georgia country co-investment fund is already demonstrating strong results:

• $180 million invested across 7 projects: Investments have focused on manufacturing, hospitality, and construction sectors.
• $850 million total project value including investor capital: Every $1 from the fund has mobilized $5 in foreign direct investment.  
• 5,300 projected new jobs: Co-investment projects are expected to create thousands of local employment opportunities.
• 2 international hotel brands attracted: Major brands Kempinski and Marriott International have entered Georgia through co-invest projects.
• 4 follow-on expansions underway: Investors are so pleased with initial co-investments that they are now expanding operations. 

These outcomes show that the co-investment fund is succeeding in its aims to upgrade Georgia’s competitiveness, stimulate economic development, and signal the country as open for business.

Looking Ahead 

Georgia’s economic ascent is just getting started. Looking ahead, the country’s prospects are bright, and the Georgia country co-investment fund stands ready to play a key role by financing strategic foreign direct investment. 

With its business-friendly and transparent model, the fund is ready to consider compelling new proposals across sectors. Expect more high-profile multinational companies to leverage the fund’s local expertise and co-investment capital.

The Georgian market offers visionary international firms an opportunity to gain a first-mover advantage in an economy set to become a regional powerhouse. So, the Georgia country co-investment fund provides the ideal launch pad.

Last Words

The Georgia Country Co-investment fund has become an indispensable player in Georgia’s economic arena. By making targeted investments, the GCF ignites economic expansion, empowers entrepreneurs, and cultivates innovation. As the Fund broadens its scope and impact, it is set to define Georgia’s economic destiny, harnessing the country’s distinctive advantages to propel it to a flourishing and sustainable tomorrow.