Georgian Co-Investment Fund’s 2014 projects: Further transparency needed - საერთაშორისო გამჭვირვალობა - საქართველო

Georgian Co-Investment Fund’s 2014 projects: Further transparency needed

29 May, 2014


In March 2014, George Bachiashvili, CEO of the Georgian Co-Investment Fund (GCF) presented five investment projects that GCF will finance and launch before the end of 2014. GCF’s flagship project, Panorama Tbilisi, was described by Bachiashvili as, “the largest ever real estate development in Georgia’s history,” a multi-functional project of hotels, serviced apartments, offices, exhibition centres, conference halls and swimming pools linked by a series of cable cars crisscrossing the city’s tourist and business centres.

According to Irakli Abesadze, deputy mayor and chairman of Tbilisi City Hall’s ‘Territory Urbanization and Utilization Issues Regulatory Commission’, a legal body that approves construction applications, on April 7th Panorama Tbilisi was denied a construction permit for not providing any of the legally required documentation.

GCF should have provided the information stipulated in Regulation N4-13: On the approval of land use and city development in Tbilisi, such as: a detailed economic feasibility study; an environmental impact assessment; statistics regarding how many square metres the construction will occupy, as well as other information such as exactly where and what the proposed construction will be (For the full list of requirements and GCF’s application to the committee see the attachments below).

Futuristic image, submitted by GCF to City Hall, of Panorama Tbilisi's main campus, Sololaki Rise.

GCF’s Official Statements (sent 27.03.2014 and 2.04.2014), in which they applied for City Hall’s permission, contained 8 photographs, 6 digital images and 5 maps demarcating the land boundaries. The Regulatory Committee deemed these documents insufficient. GCF maintains that, “the relevant documentation was submitted according to the set requirements,” and that it will reapply for permission.

According to Bachiashvili, Panorama Tbilisi’s gross buildable area is 270,000 m² and it will be built in Freedom Square, Erekle Square, Sololaki Rise and Sololaki Hills – areas that have a special legal status due to their historic significance, says Abesadze.

Current photograph of Sololaki Rise, submitted by GCF to City Hall. Sololaki Rise is situated next to the Tbilisi residence of Bidzina Ivanishvili

Bachiashvili told the regulatory committee that GCF has already purchased the land it requires to build Panorama Tbilisi, including some land plots owned by Bidzina Ivanishvili, via Cartu Group. A number of representatives from Cartu Bank (founded by Ivanishvili) attended the Committee hearing with representatives from GCF. According to GCF, Cartu Bank employees are also “working on the Panorama Tbilisi project”.

TI Georgia urges GCF to provide all the necessary documentation stipulated by law in order to allow the Committee to make a thorough analysis of this construction application.

GCF’S Financial Backers

Bachiashvili said at the launch that the total volume of investments in Panorama Tbilisi will be USD 0.5 billion, and that “each of the investments has been initiated by a co-investor of the fund.”  Questions from the public and journalists sought clarification on who the co-investors funding Panorama Tbilisi are. GCF replied to TI Georgia that, “at this stage Mr. Bidzina Ivanishvili is the sole investor in Panorama Tbilisi. It is possible for other investors to join … at any time during the development phases.”

After the launch of the GCF in September 2013, TI Georgia recommended that GCF be transparent about whom its investors are and what projects they are seeking to invest in.  

According to GCF, its limited partners include:

  •  Dhabi Group (UAE),
  •  RAK Investment Authority (UAE),
  •  The State Oil Fund of the Republic of Azerbaijan,
  •  Batumi Industrial Holdings Limited (owned by Kazakh state-owned KazTransOil),
  •  Calik Holdings A.S (Turkey),
  •  Milestone International Holdings Group Limited (China),
  •  Bidzina Ivanishvili,
  •   Alexander Mashkevich, and
  • The estate of the late Georgian oligarch Badri Patarkatsishvili.


GCF says that it is bound by the terms of its Limited Partnership Agreement and cannot confirm or deny which of its current limited partners invest in projects and how much they invest, but that they will publicly announce if additional limited partners join the fund. Only one limited partner - Bidzina Ivanishvili - has so far publicly confirmed that he has invested as a Limited Partner in GCF. Ivanishvili is also the only publicly announced co-investor in any of GCF’s projects (Panorama Tbilisi).

TI Georgia believes that it is important for GCF to publicly announce which individuals invest in GCF projects alongside Bidzina Ivanishvili. While GCF can achieve positive benefits for the Georgian economy and job creation. The level of transparency that we recommend GCF provides is important in order to attract investors, whether they wish to co-invest with the Fund or in a project that may be in competition with a GCF-backed project. Moreover, this openness will allow us, the public, and other investors to monitor the current government and the economy effectively.

For example, one of the investors cited by GCF, Alexander Mashkevich, became a billionaire in the Kazakh mining sector. In June 2011, the Belgian State Prosecutor, dropped money-laundering and fraud charges against Mashkevich and his two business partners in return for a fine. It was one of the longest-running criminal cases in Belgium. Another investor, according to GCF’s website, Ahmet Calik, is the founder and current chairman of Calik Holdings, had close business and political connections to President Saparmurat Niyazov (“Turkmenbashi”) of Turkmenistan (see previous blog).


GCF has announced two hydro power plant projects: Mtkvari Hydropower Plant (total investment value USD 98 million) and Tskhenistskali (USD 678 million). GCF purchased 100% of the smaller HPP, Mtkvari on 16 May 2014 from Caucasus Energy & Infrastructure JSC (CEI).

Mtkvari HPP, which will have 53.3MW of total installed capacity, is located on the Mtkvari river in Akhaltsikhe. Preliminary construction of Mtkvari HPP was launched in November 2009. Once restarted, construction will take a further 2.5-3 years to complete according to Bidzina Bejuashvili, Executive Chairman of CEI.


Mtkvari HPP, source: Samkhretis Karibche,

According to a loan summary for Mtkvari HPP released by OPIC (the loan was never disbursed):  

“The HPP has been designed to take advantage of a new 400-500 kilovolt transmission line under construction – the so-called ‘Black Sea High Voltage Line’ – between Georgia and Turkey. The line will enable Georgian power providers to export electricity to Turkey and eventually to the rest of continental Europe through Turkey’s membership in the European Network of Transmission System Operators for Electricity.”

For further details see GCF’s press release on its website.


The winning purchaser of Tskhenistskali, a 347 MW Cascade of HPPs located in Lentekhi and Tsageri, has not yet been announced. Currently owned by the Ministry of Energy, in January 2014, the government advertised an expression of interest for the construction, ownership, operation, technical and economic feasibility studies for Tskhenistskali; the deadline for submission of a bid was March 2014.

According to Liza Tavdumadze, Head of the Investment Projects at the Ministry, they have received four bids from private companies, two of which have sent bank guarantees - a necessary qualification requirement. Those applications with a bank guarantee, which satisfy the qualification requirements, will be sent to the Government of Georgia Tavdumadze told TI Georgia. The purchaser will be selected according to their “lowest proposed selling price of electricity to JSC Electricity System Commercial Operator”, and the official winner will be revealed by a decree from Prime Minister Irakli Garibashvili.

GCF told TI Georgia that it, “has submitted the most competitive tender in terms of price for Tskhenistskali Cascade. We have submitted a bank guarantee as required by the tender terms and are currently awaiting a formal decision and announcement of the project from the MoE and therefore we have satisfied all requirements of the tender process. We are in advanced talks over acquiring Tskhenistsqali HPP.”


Dairy farm and processing plant:

Bachiashvili announced at the launch that GCF will develop a USD 45 million dairy farm and processing plant in West Georgia which will, produce 50 tons of milk per day – a 25 per cent substitution of dairy products imported into Georgia. GCF is seeking co-investors.

Tomato Greenhouse:

According to GCF, during the Georgia-France Economic Forum held on 13 May 2014 for the official visit of President Francois Hollande, the fund signed a memorandum of understanding with French agricultural company Richel Group, to co-partner with GCF in constructing a tomato greenhouse in East Georgia. Richel will not be a project co-investor at this stage, GCF is seeking co-investors.

The initial development will be 10.4 hectares, a USD 11.6 million investment. After full implementation, the project will encompass 35 hectares. Annual production will be 4,500 tons of tomatoes, equal to 30 per cent of current tomato imports into Georgia says GCF.

Tbilisi City Hall’s Territory Urbanization and Utilization Issues Regulatory Commission's Public Hearing on Construction Approval for Panorama Tbilisi

Author: Eva Anderson