Business development opportunities in Georgia

1. Business development opportunities in Georgia Kiev, March 29, 2012 www.gf-capital.com I Kiev, March 29, 2012

2. Agenda • Georgia – Untapping Great Development Potential • Georgian Economy at a glance • Economy competitiveness • Growth Perspectives in: • Agriculture • Energy • Manufacturing • Transport & Logistics • Tourism, • Specific Opportunities Georgian Economy www.gf-capital.com I Kiev, March 29, 2012

3. Economy at a Glance www.gf-capital.com I Kiev, March 29, 2012

4. Competitiveness & Trade • Georgia has significant negative trade balance with higher ranked trade partners 61 57 89 27 5 63 4 71 98 25 Competitiveness Rank www.gf-capital.com I Kiev, March 29, 2012

5. Competitiveness Index 2020 Target competitiveness rank countries and neighbours Source: World Economic Forum, Globalcompetitiveness Report 2010-2011 www.gf-capital.com I Kiev, March 29, 2012

6. Georgian Economy 2020 www.gf-capital.com I Kiev, March 29, 2012

7. Agriculture Georgian Economy Agriculture Source: Government of Georgia’s Sector Presentation www.gf-capital.com I Kiev, March 29, 2012

8. Agriculture Export-Import, 2010 • According to the 2010 data, the export and import of agro food products were US$314 million and US$939 million. • In 2010, main export commodities were: nuts, citruses, natural grape wines, spirits, soda, mineral & spring waters, sheep, cattle, etc. www.gf-capital.com I Kiev, March 29, 2012 Source: Government of Georgia’s Sector Presentation

9. Major Export Products Source: Government of Georgia’, Economic Sector Presentation www.gf-capital.com I Kiev, March 29, 2012

10. 4 Reasons for Underdeveloped Agricultural Sector Source: Government of Georgia’, Economic Sector Presentation www.gf-capital.com I Kiev, March 29, 2012

11. Important Snap-Shots Main challenges are monocultures and low production per ha. • With technology and knowhow average harvest could be tripled • During the Soviet Era, Georgia used to be main supplier of the Union’s market with selected agro products, which pushed the country into monocultural agro production (ex. grape, citrus, tea etc) * Data for 1988 is exaggerated to some extent due to reporting interests in the centralised system of planning Source: Government of Georgia’, Economic Sector Presentation www.gf-capital.com I Kiev, March 29, 2012

12. Regional Energy Hub – Net Exporter Source: Government of Georgia’, Economic Sector Presentation www.gf-capital.com I Kiev, March 29, 2012

13. Electricity Balance www.gf-capital.com I Kiev, March 29, 2012

14. Georgia’s Energy Dynamics Source: Government of Georgia’, Economic Sector Presentation www.gf-capital.com I Kiev, March 29, 2012

15. Transmission Capacity Source: Government of Georgia’, Economic Sector Presentation www.gf-capital.com I Kiev, March 29, 2012

16. Large-Scale Hydro Power Projects 15 Projects under Design/Construction Source: Government of Georgia’, Economic Sector Presentation www.gf-capital.com I Kiev, March 29, 2012

17. traseka WWW.TRACECA.ORG

18. www.gf-capital.com I Kiev, March 29, 2012

19. There is a huge untapped potential in Marine, cargo storage and handling and air cargo logistics. • Georgia-Turkey railway expeced completion in 2013 will open another efficient transportation possibilities • Marine and railway development will stimulate road transport and logistics centers development. • Transport system development will signicantly improve Georgia’s products cost competitivenes. Source: GFC Analysis www.gf-capital.com I Kiev, March 29, 2012

20. Marine Transport Development Potential • Growth potential is huge when starting from zero • Georgia still has experienced and qualified Marine personnel, hystory of shipbuilding and operating significant fleets Source: GFC Analysis www.gf-capital.com I Kiev, March 29, 2012

21. . Georgian Economy Source: USAID, EPI Value Chain Assessment Tourism • Number of tourist arrivals in 2011 – almost 3 Million • Hotel and restaurant revenues in 2010 – USD 200 M • Kobuleti and Anaklia Free Tourism Zone (plot of land for symbolic GEL 1 price, customized profit and property tax exemptions) www.gf-capital.com I Kiev, March 29, 2012

22. WHY TO INVEST IN GEORGIA /Investment Incentives / • Liberal Tax Code • Tax-Free Regimes (FIZ, FTZ) • Preferred Trade Regimes with Major Trading Partners • Tax Incentives for Agricultural Investments • Cheap & Skilled Workforce • Liberal Labor Code • Investor Protection Regulations • Investment Guarantees • Choice of Law for Contracts • International Dispute Resolution Mechanism www.gf-capital.com I Kiev, March 29, 2012

23. Real Estate Industry Drivers Specific Opportunities Real Estate • Privatization • Liberal land ownership law • Road infrastructure development/improvement • Urban and regional development • Simplified permitting & free competition • Old Tbilisi New Life – Tbilisi municipality initiative • Free Touristic zones in Kobuleti and Anaklia www.gf-capital.com I Kiev, March 29, 2012

24. Entertainment and Retail Center Specific Opportunities Real Estate • Project Overview • Aim of the project is to attract USD 7 Mil financing for the swimming pool, gim and retail ceneter • Located on the newly built main road in the center of Tbilisi’ most affluent area; • Land is the property of the interested investor/developer with the best in the market experience in the simmilar projects • Retail space occupancyis assured by preliminary contracts with the future tanants • Design and site preparation works are completed www.gf-capital.com I Kiev, March 29, 2012

25. Project Example in Real Estate VillaPark – Project Overview Aim of the project is to attract USD 16M financing for the elite village project in Tbilisi with 57% IRR and 4.5M NPV investment returns. • Only three competing projects with similar concept and target market segment. Total number of houses of ALL competing projects is less than 500 during the next 2-3 years. • Possibility to adjust project scale and phases to sales development to reduce sales risks. This provides more flexibility in the project development compared to multistory residential building development, which in current market conditions requires entire building completion before starting sales, thus increasing sales risks. • 1 sq.m. prices of the multistory residential buildings are similar to the project proposed prices of USD 800-1000. We expect to sell to potential medium market apartment buyers by proposing very competitive and much more attractive lifestyle alternative. Specific Opportunities Real Estate www.gf-capital.com I Kiev, March 29, 2012

26. Other Real Estate Development Opportunities • Inexpensive shopping centers in Tbilisi as well as in the regional cities; • Modern bus stations with shopping, food courts and entertainment; • GF Capital can assure renting agreements with tenants prior to the construction as well as manage project from concept to turn key to the operator Specific Opportunities Real Estate www.gf-capital.com I Kiev, March 29, 2012

27. Cold Storage in GeorgiaGreenfield Investment Opportunity Project Overview Partnership Fund, an investment fund of the Government of Georgia, is inviting strategic investors to co-invest in a USD 7 mil. Greenfield project aiming at development of 4,700t Capacity Fruit and Vegetables Cold Storage serving 1.2 mil. population of Tbilisi and Rustavi with quality fresh fruits and vegetables year round. Co-investment and support for setting up the project will be facilitated by Partnership Fund. Financing • The needed financing, estimated at USD 7 mil., is envisaged to be formed from: • The Investor’s contribution in the amount of 25% of financing needed in common equity • Fund’s matching contribution through sub-debt or common equity • Debt financing in the amount of 50%of total financing need, that can be acquired in Georgian market with assistance of Partnership fund Specific Opportunities Logistics and Wholesale www.gf-capital.com I Kiev, March 29, 2012

28. Cold Storage in GeorgiaGreenfield Investment Opportunity Project Overview Specific Opportunities Logistics and Wholesale www.gf-capital.com I Kiev, March 29, 2012

29. Christmas Tree FarmingGreenfield Investment Opportunity Project Overview Partnership Fund, an investment fund of the Government of Georgia, is inviting strategic investors to co-invest in a USD 7.9 mil. Greenfield project aiming at Christmas tree growing and exporting from Georgia to Europe Financing • The needed capital, estimated at USD 7.9 mil., is envisaged to be formed from: • The Investor’s contribution in the amount of 25% of capital needed in common equity • Fund’s matching contribution through sub-debt or common equity • Debt financing in the amount of 50% of capital needed, that can be acquired in Georgian market with assistance of Partnership fund Specific Opportunities Tree Farming www.gf-capital.com I Kiev, March 29, 2012

30. Christmas Tree FarmingGreenfield Investment Opportunity Project Overview Specific Opportunities Tree Farming www.gf-capital.com I Kiev, March 29, 2012

31. Project example in Wood Processing Project Overview • The client proposes to sell all rights and obligations related to the registered forest management license free of due and/or accrued tax and lending obligations to the potential operator. The proposed price for the license is USD 10M. Investment NPV – USD 7,4 M (@15% discount rate) and IRR – 57% • The deal sub-option includes current operator continuing operations and own 30% of the company and selling the remaining 70% at USD 7M • Additional business development option: production of various type wood boards to substitute imports. Specific Opportunities Wood Processing www.gf-capital.com I Kiev, March 29, 2012

32. Consulting • Marketing analysis and business plans from the industry and country’s best experts will eliminate high-price mistake risks and provide better choice of alternative options in business development in Georgia • Knowing value chain current settings and wider choice of cooperation and competition options will help in defining most effective and efficient market entry and development strategies • We will provide our advice on taxand regulatory matters • Our reporting system will be tailored to required scope and schedule beyond on traditional financial reporting, including key performance indicators for the industry, market and value chain components. Specific Opportunities Cooperation www.gf-capital.com I Kiev, March 29, 2012

33. Project Management We will reduce business development risks and costs by: • Identifying, analyzing, planning and implementing best risk response measures; • Your development will be international, while costs will be local; • We will provide you with all the needed control instruments to assure project objectives performance You will achieve better project performance because we will: • Provide best available industry experts and managers; • Assure plan performance by consistently measuring project targets and milestones performance; • Provide better alternatives to choose for each and every project component as well as for the entire project; • Explore possibilities of donor assistance, cost savings and preferential regulatory options Specific Opportunities Cooperation www.gf-capital.com I Kiev, March 29, 2012

34. Attracting Financing • If looking for investing in Georgia, we will provide wide range of pre-screened investment opportunities and options; • Joint projects for finding strategic and financial investors and financiers; Specific Opportunities Cooperation www.gf-capital.com I Kiev, March 29, 2012

35. Contact Us Specific Opportunities Cooperation