Page 26 - GEORptAug19

FDI in Georgia down 35% y/y in 2018
Breaking down the data on Q1 of this year, the Georgian Tourism Development Fund—owned, according to BPN.ge by Ivanishvili—was ranked by the statistics office as among the 10 largest foreign investors. The company is located at the address of Ivanishvili’s Cartu Foundation. It is solely in the ownership of Panama-based Frankston International, which BPN.ge reported is also owned by Ivanishvili. The company was established on November 3, 2014.
Tourism Development Fund was on the 2018 list of the top 10 FDI investors in Georgia in 2018 as well, with $76mn (6% of the year's total FDI) invested.
According to preliminary data from Geostat, the volume of FDI in Georgia amounted to $281.1mn in the first quarter of 2019, 6.3% y/y down.
Ireland was the country's largest direct investor country. This is explained by Irish company Paddy Power Betfair (PPB) purchasing 51% in the largest player in Georgia’s gambling market, Adjarabet, for GBP101mn in February this year.
The company has said that through agreed option arrangements it expected to acquire the remaining 49% of Adjarabet after three years. Adjarabet is licensed to offer a range of online betting and gaming products in Georgia including casino, sports, poker and peer-to-peer games. It takes an estimated 40% share of total online gambling revenues in Georgia.
Gross foreign direct investments in Georgia decreased by 6.35 y/y to $281mn in the quarter, but equity investments increased by 28% y/y to $159mn. Re-invested earnings were smaller in the quarter, dragging down the headline FDI figure.
Foreign direct investment (FDI) in Georgia decreased by 35% y/y to to $1.232bn in 2018, statistics office Geostat has announced . The figure is 23% below the average FDI seen in the previous five-year period.
The FDI-to-GDP ratio remained, however, robust at some 7.5% in 2018.
The main reasons for the decline in FDI included the completion of a pipeline project, the transferring of ownership in some companies from non-resident to resident units and a reduction in liabilities to non-resident direct investors, Geostat observed.
The volume of new equity investments dropped by 41% y/y to $700mn, which was also 41% below the average in the previous five years. The volume of earnings generated by FDI companies in Georgia and re-invested dropped by 15% y/y but was 60% above the five-year average. Inter-company borrowing was not yet significant: a negative $26mn in 2018 (local FDI companies returning loans to partners in the same group abroad).
The largest FDI investor remained Azerbaijan (19.5%), followed by the UK (16.5%) and the Netherlands (13.6%). Azerbaijan was the largest investor in the country due to the gas pipeline project centred on Shah Deniz.
Meanwhile, one of the fastest growing investors, China, ranked as the seventh largest investor in Georgia with $65mn of investments in 2018.
Data also showed that the financial sector attracted $277mn of investment, the
26 GEORGIA Country Report August 2019 www.intellinews.com