Private Equity Market Development in Georgia

In order to assess the stage of private equity market development in Georgia, the evaluators conducted desk-based research on the corporate sector, surveyed Georgian small and medium-size enterprises (SME) and interviewed most of the local private equity provider companies, including Development Finance Institutions (DFIs) and relevant government organizations.

According to findings, the Georgian private equity market is in the early stage of development with no purely private equity funds operating in Georgia. On the supply side, the local corporate sector is dominated by SMEs, which play a significant role in economic development, lack access to finance (with estimated $2.5 billion in unmet demand in financing), have poor corporate governance structure, and lack awareness on alternative financing options.

Considering this, during interviews respondents reported untapped potential for PE market development in Georgia, but name several constraints deterring development. Some of the main constraints include the small size of local economy, market illiquidity, limited exit opportunities, and lack of investment experience in PE, and successful track records among local investors. Mixing local knowledge with regional expertise could be the best suggested option for PE market development in Georgia and the region