LONDON: Georgia Capital PLC (GCAP), the ultimate owner of a 92.4% equity stake in its beer and distribution business, has entered into an agreement with a subsidiary of Royal Swinkels N.V. for the disposal of the business.

Following the disposal, the beer and distribution business will be held through a new holding company domiciled in the Netherlands (the “Dutch Holdco”).

Georgia Capital will obtain a 20% holding in the Dutch Holdco (and Royal Swinkels 80%). The parties have put in place a put/call structure relating to the remaining GCAP 20% holding.

GCAP will realise net proceeds from the Transaction amounting to at least US$ 63.0 million. The disposal is subject to customary closing conditions, including the approval of the Georgian Competition and Consumer Agency. Completion of the Transaction and the receipt of full sales proceeds is expected before 31 December 2024.

The transaction is in line with GCAP’s capital-light investment strategy and represents another successful completion of the full investment cycle of our private assets: to invest, to grow, and finally to monetise the investment via a cash exit.

Under the agreement, GCAP’s 20% holding in the Dutch Holdco will be subject to an ongoing put/call option structure. The put option granted to GCAP can be exercised at a pre-agreed EV/EBITDA multiple, in each of the twelve-month periods following the approval of the audited consolidated accounts of the Dutch Holdco by shareholders for each of the financial years ended 31 December in 2028, 2029 and 2030.

The call option granted to Royal Swinkels can be exercised at a pre-agreed multiple in each twelve-month period commencing on the date of expiry of the put option and expiring twelve months after the audited consolidated annual accounts of the Dutch Holdco have been adopted by shareholders for the financial years ended 2031, 2032 and 2033.

Following the disposal, the value of GCAP’s put option will be presented under the “Listed and Observable” portfolio category on GCAP’s NAV statement.

Irakli Gilauri, Georgia Capital’s Chairman and CEO commented: “I am delighted to have agreed the sale of GCAP’s beer and distribution business to such a high-quality international investor and strategic purchaser, Royal Swinkels.

The strong Royal Swinkels management team can add substantial value to the Business in its new period of ownership and can count fully on our support as a minority shareholder. I would like to thank our exceptional management team in the beer and distribution business, whose outstanding abilities have transformed the Business into its current successful state.

Over the past three years, the Business has achieved a revenue growth rate of 29% per annum and an impressive 79% CAGR in EBITDA, significantly exceeding our expectations. For Georgia Capital, this transaction represents another successful monetisation of its private businesses, yielding significant net cash proceeds of US$ c.63.0 million.

The use of the Transaction proceeds will be announced following the completion of the Transaction and receipt of the proceeds, which is expected to take place prior to the end of 2024.”

Peer Swinkels, CEO of Royal Swinkels commented: “We are excited to partner with Georgia Capital and the talented people in the beer and distribution business, who have played a vital role in shaping the Business into what it is today. This acquisition offers a portfolio of strong brand names, a modern brewery, strong distribution capabilities, and numerous growth opportunities. We have complete confidence in the teams and look forward to collaborating with them to drive the Business’ continued success.”

The beer and distribution business manages the production, distribution, and sale of beer and lemonade, both in Georgia and in export markets. The Business is also engaged in the import and distribution of coffee and the distribution of drinking water.

The brands include Heineken, Black Lion (the leading Georgian craft beer producer, acquired in 2018), ICY (its flagship mainstream beer brand), Kazbegi, which was acquired in 2019, Amstel and Krusovice beer, for which the Business acquired a licence in 2019, and Kayaki (the Business’s light beer brand).

The business operates through JSC Georgian Beverages Holdings and its subsidiaries: Global Beer Georgia LLC, Georgia Distribution & Logistics Ltd, Genuine Brewing Company LLC and Global Coffee Georgia LLC. The beer and distribution business is a part of the wider beverages business, which also includes the wine business, the latter being outside of the scope of this disposal.

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