Georgia Capital PLC (CGEO) Earnings Call Transcript & Summary

As you know, we are presenting today 2020 results, Q4 and 2020 results. Most of you will probably see in our results, but it will be good to walk you through this. Now let's me talk about the agenda first. Our agenda will be update you on COVID-19 situation in Georgia as well as some macro results. I'll talk about the results of our portfolio companies, which be that actually I will sum the results our portfolio companies are having. And then I will talk about NAV development. Giorgi Alpaidze, our CFO, will update you on the valuations, how we are valuing our portfolio company, and in the end, I will do the wrap-up. So let me start with the COVID update. Georgia has been in second lockdown in December, January and partially February -- actually part from November, December, January, and active cases in this lockdown have decreased quite dramatically, around 88% decrease we have in the active cases from 27,000 to 3,000 now we are having. Daily cases also decreased by 95%, a big decline. And average testings have been up by 15%. And bad news or good news also is that total cases in Georgia was recorded around 270,000, which is a big number for the 3.7 million population. And that -- and at the same time, the positive rate tested currently is at 2.6%, which is quite low. So this, all this led the government to lift the lockdown, and now we are -- now all the transport and municipal transport is open since mid-February. Schools have been opened, all the shops are opened. The flight regular price has been restored. And basically, some of the activities have also been opened actually this morning. Hotels, ski resorts have been opened, it has been announced today it's open now. And all the gyms and swimming pools, exercise will be open. So actually, this coming month we are expecting to -- economy to resume and grow. And at the same time, we don't think that we're going to get a big third wave, if we get one, due to the fact that the infection rate is quite high. I mean the people who've been infected with this virus, or the estimate is about 780,000 people to be -- to have lived through this COVID. So that means that the spread, we expect to be less in third time. In terms of the economy, and we have kind of a true indication, when we were in full lockdown in April and May and where we were in the partial lockdown in November, December, how the economy behaves. So you see that in the first case that we had a very good remittances, inflows in -- after the full lockdown. And you see it at the June through December, it grew on average 20%-plus remittances. We also had a very good result in terms of the export/import balance have improved quite well. And GDP in the full lockdown was around minus 16%, minus 14%. Now it's around 7%, 8% in November, December. But actually, one thing to note is that when the economy was opened up, we were between minus 5%. And actually kind of 0 in September, we ended up minus 0.7%. So we expect that minus 7 that we were during the partial lockdown to go closer to 0.0. Bad news is that vaccines, we have not seen a single vaccine yet in the country. So we hope that to arrive and that would -- actually would be helpful for our economy to function smoothly. In terms of the currency and reserves, national bank decided to accumulate the reserves during this pandemic period. And then we are at $4 billion of international reserves. That's a high point ever recorded in Georgia's history. And at the same time, the currency is quite undervalued basically. I mean you see the real chart on the right-hand side, we expect the Mestiachala to get -- to strengthen the currency. But at this stage, what we are seeing at national, whatever the government is borrowing from international dollars, this money has not been really been [ necessary ] to get the National Bank to intervening as much in the FX market. And it's letting our reserves to accumulate rather than to intervene in the market. So that's -- on the back of that, lari has been actually quite stable during this pandemic period. In terms of the results, just some key highlights for 2020. We saw that GHG share exchange facility was one of the things which we think that it was successfully done last year. We also updated the strategy last year, and we have presented in our November Investor Day. Now with our strategy, we are focusing on the large opportunities in Georgia, which we yield around GEL 0.5 billion of equity value at least, which basically reshaped our thinking where to allocate our capital and how to progress further. In terms of the water utility business, we had the one big progress in terms of the tariff enhancement for 2020 to 2023 regulatory period, and our allowed revenue will grow nearly 40% for our water business. We also did the first ever green Eurobond issued by the water utility energy businesses during the pandemic times. And in energy business, we bought out our minority partner. We consolidated our ownership in clean renewable energy business. Now we own 100% of it. Well, one other kind of event I would like to mention, which is not maybe big one, but I think it's important. We have divested from one of the hospitals in GHG, at 13.5x EV/EBITDA, that's where our actually GHG is valued on our books. The important point that we divested 13.5x EV/EBITDA, which was a minority stake, not the majority. So that's a EV transfer. And due to this divestment, we have increased our ROIC for our healthcare business by 90 bps. And that gives you a discipline where we are actually as imagined, we are very risk -- we focus on key -- enhanced on the ROIC in our portfolio companies. And this is one of the examples which we'll continue to do to enhance our ROIC in all of our portfolio companies to divest low-ROIC businesses or assets. In terms of the aggregate revenue, you see that in Q4, aggregate revenue of our portfolio companies increased by more than 5% versus a 3% decline when there was a full lockdown in Q2. And full year revenue growth was around 6.5%, which we think is a very good result in this pandemic period times and if our companies are growing the revenues during the harsh lockdowns, it is actually a good thing. So I think that shows the nature of our portfolio. Our portfolio is very effective, and actually this pandemic showed it even more. We cannot even imagine that we would be so our portfolio companies will do so well. If we go one by one the companies basically in terms of the revenue, in Q4 we had -- our health care business grew by 13%, although we had a 2.5% decline in revenue in the health care business. In Q1, the revenue growth was also very strong on the health care business in -- actually in January, February. So we expect that trend to continue and health care business to deliver good growth. You see also that our pharmacy business was extremely resilient to this turbulent times. In Q4, it grew its revenue by 16.5%. And in total, it delivered 10.5% growth in revenue. If we look at our water utility business, you see that we had a big decline in revenue from our hydro, which is Zhinvali Hydro, which is attached to the water utility and it's used as a reservoir for our water utility. We had unusually very dry season, which is once in 100 years [ type of event ]. And as a result, mainly driven by the low water inflows in Zhinvali and also the low consumption on the corporate part on the water utility business. Good news is that because it's regulated, we got back in this revenue this volume growth, what we had in revenue was what we had. With that, it's back by -- from the regulator in 2021 and 2023 regulatory period. So I think if you will be there to show the normalized revenue for our water utility business, which is basically -- which would have been around GEL 178 million, which would have grown around 9%. So even declining revenue in water activity is actually is not lost. Because it's called back by the regulator and therefore basically our portfolio has done extremely, extremely well. Now if you look at our P&C business, in Q4 we had a P&C and -- sorry, health insurance businesses, Q4 revenue was up 5%. In total, we netted a 3.6% decline. We had a strong performance in renewable energy. The revenue went up 162%, mainly driven by acquisitions. But like-for-like growth was also around 12.5% in dollar terms. So in lari terms, it grew in -- growth was even stronger. I think the good news is that in non-PPA months, average tariff last year grew by 35%. That gives you a kind of an indication that demand for energy is quite big in this country. Education business also grew 131% year-over-year, but like-for-like it grew by 5.6%, so still very strong growth. So we are happy with the results again and the performance of both energy and the education business. If you look at the EBITDA, consolidated EBITDA went up 1% in Q4, and it went up by 4% in full year. So we had a strong EBITDA growth in this -- I mean it's not strong to grow by 4%, but for pandemic period, it's not bad. In terms of cash generation, our net operating cash from our portfolio companies went up 63%. When the pandemic hit the streets, we announced the -- we shifted our strategy and we said that we are moving to cash accumulation and preservation strategy, which actually worked extremely well. You see the net operating cash is up to GEL 376 million from GEL 230 million, big increase. And balance of our -- of cash balance of our portfolio companies went up 114% to GEL 392 million, so that's a big growth also in terms of the cash balance. GCAP remains quite liquid, with GEL 284 million at its hands. In terms of the NAV development, despite the tough year, NAV per share went up by 2.7%. In Q4, it went up to 27%. And we show that -- and share of the private business is -- in total went to the 82%, which was our target to have private businesses, what we call the controllable NAV, to be plus 80% of our portfolio, and we have achieved that one last year. And good news is that our NAV per share is up. At the same time, we're looking at it as the controllable NAV. It went up from GEL 25.5 to GEL 39.3, and it went up by 54%. But if we adjust for transfer of GHG, it was up in Q4 by 26% and it was up by 30% year-over-year. So controllable NAV year-over-year was up 30%. Now if you look at the movement in Q4, NAV per share went up by 37% (sic) [ 27% ], which was driven by 18% -- or 19% increase in large portfolio companies -- in the value of large portfolio companies. And BoG or Bank of Georgia's stake went up by -- it contributed 10% increase in our NAV. Investment stage portfolio companies contributed 1.2 percentage point growth to NAV. Other portfolio companies, what we call the subscale companies, were down by 0.5%. Operating expenses contributed also 0.5% decrease. And 1.8% decrease contributed the FX and others. So this is -- was mainly driven by devaluation, interest payments in our [indiscernible] that contributed to this decline of 1.8%. So in total, 27% growth in Q4. If we look at the full year growth, full year growth was mainly driven by the GHG and large portfolio companies by 13 -- more than 13 percentage point contribution by large portfolio companies and GHG transaction. The BoG contributed negatively, negative minus 3.5. Investment stage portfolio companies were contributing to 5.6 percentage point growth. And other portfolio companies was down 12.4%. As you may know, this is due to our write-down, heavy write-down on our hospitality business. That is most mainly driven by that. We marked down considerably our hospitality business. And as we said in the portfolio -- in our update strategy, the companies which are under other category will be -- will be sold down gradually in next 2, 3 years. Because these companies, we don't believe they can achieve GEL 0.5 billion mark, which is our kind of target value for our portfolio companies. Then again, FX had a negative contribution of around 12% at this point. And operating expenses had around 1.8% contribution, in negative contribution. So overall, the NAV per share was up 2.7%. And now let me give Giorgi the floor to continue with valuations. Giorgi? I hope you are at the end of the presentation and...

Thank you, Irakli. Good morning, everyone, good afternoon depending where you are. So let me walk you through our valuations for the fourth quarter for our portfolio companies. As a reminder, I would highlight that you may recall during the Investor Day, we announced that we will be moving all our large portfolio companies to be externally valued by an independent valuation company, which is Duff & Phelps and continued to be Duff & Phelps in the fourth quarter, so in addition to GHG. Duff & Phelps also valued our water utility business and the P&C insurance business. The rest of the businesses will continue to be valued internally, besides Bank of Georgia, obviously, where we use the closing exchange -- closing share price on London Stock Exchange. And you may recall that the valuations are also audited by our auditors, EY. I will start on Page 19. And here, you will see that our portfolio value during the fourth quarter has increased by GEL 500 million approximately, which is 21% growth when we look at to the fourth quarter. And now the portfolio value is about GEL 2.9 billion. This outstanding growth was a result of strong operating performance of the portfolio companies, but also -- which was a result of earnings growth and the strong cash flow generation leading to the decreases in their net debt, but also the expansion of some multiples in some of our businesses during the quarter. As we know, fourth quarter was characterized by the vaccine use, which led to the multiple expansions across the businesses across the board and including in relevant industry and emerging markets. So as you look at devaluations as we go through them, some of the multiple expansions relate to that development around the markets. And generally the overall portfolio value, our growth was attributable to the following drivers: Bank of Georgia generated over GEL 172 million value. That was a result of the Bank of Georgia share price rallying in the fourth quarter from just under GBP 9 to above GBP 12 at the end of December 2020. As a result, the growth in the value also resulted in Bank of Georgia's share, or the share of the listed assets in our portfolio, going from 15% to about 18% at the end of December 2020. In the large portfolio companies, which all of them were -- are externally valued, there the valuation changes that contributed to GEL 312 million growth. And as a result, now large portfolio companies are about 64% of our portfolio value. Next, we have the investment stage portfolio companies where the overall contribution was GEL 21 million, almost equally split between education and the renewable energy businesses. And the other portfolio companies in aggregate had about negative GEL 8 million movement, and their share within the overall portfolio decreasing further to about 7% at the end of 2020. Moving to the next slide, which is Slide 20 here, we present the full year information and the full year change in our portfolio value. You would see that on a full year basis, the portfolio increased by 29%, with the share of the listed assets going from 46% to 18%. But that's also on the back of GHG becoming a private company, where we completed the minority shareholding buyout in the second half of 2020. I will not spend much time on this slide, and we'll go through the detailed year-end valuations. So here, you will see all the details of our portfolio companies and how they were valued at the end of 2020. So as we mentioned earlier, from the total portfolio, 64% represent the large portfolio assets, and 18% is liquid assets Bank of Georgia. So in aggregate, 82% was valued externally either by the independent valuation company or by the stock exchange share price. So on this slide, you will see that in terms of the multiples for the large portfolio companies, we have about 13.2x EV/EBITDA multiple for healthcare services, which was slightly higher than at the end of September, which was the first time we presented the GHG valuations. I do want to highlight as well that for GHG, the third quarter valuation was in fact based on the first half results. And so it was through the end of June 2020. So the fourth quarter valuations for the GHG businesses, which is health care services, retail, and medical insurance, is really the valuation for the second half performance of 2020. In the retail pharmacy, multiple expanded slightly as well to 9.1x EV/EBITDA. In water utility, here we look at the adjusted EBITDA. We'll explain that later on the slide. And on the adjusted EBITDA basis, it resulted in 9.4x EV/EBITDA, the last 12 months' multiple. In the insurance business in both, we saw the expansion of the multiples for the P&C and for the medical businesses. And as a result, we had about 11.6x P/E multiple for the P&C insurance and 10.1x for the medical insurance. In the renewable energy and the education, no material changes were made to the multiples. And the values, as we mentioned earlier, increased by GEL 10 million each. And then the other portfolio was also valued on a sum of the parts basis. Each business continued to be valued internally and independently. With that, I will dive into the healthcare services business. So here, you'll see that the enterprise value decreased by GEL 79 million, but that was the result of the HTMC de-consolidation, which was included in the valuation as of the end of June, but has been removed now in December because of the divestment. When we exclude HTMC, there is an increase in enterprise value, because the EBITDA of the continuing businesses excluding HTMC has increased because of the operating performance and also because of the multiple expansion. So the enterprise value of this business was GEL 837 million. And when we deduct the net debt, that was GEL 230 million in minority interest, we arrive at GEL 572 million. So this slide summarizes the different valuation inputs. And overall, Georgia Capital recorded GEL 98 million valuation gain from the valuation of the health care business in the fourth quarter. In the retail pharmacy business, we had an increase in the enterprise value here driven by the strong performance of the business and the double-digit growth of the revenues in the fourth quarter, as you saw earlier. And also that translated into the growth in the EBITDA, as you see here on this slide in the last 12 months basis. So that enterprise value was higher by about 9% to GEL 836 million. And then we deduct the net debt, which was GEL 130 million, that includes the lease liabilities, but also excludes any minimum cash required, which is the way Duff & Phelps values this business. And then we also deduct the minority interest. And we arrive to GEL 553 million ending value, which represents about GEL 78 million higher valuation, or the valuation gain for Georgia Capital in the fourth quarter. In the medical insurance business, we had a growth in the net income of -- by approximately GEL 800,000. The multiples also expanded from 8x to 10.1x. And as a result, we have an increase, we look at the enterprise value here as well, by GEL 5 million. We then also had the excess cash, but this -- that this business has, to arrive at the equity value of GEL 65 million, which is about GEL 20 million higher than what we had in the third quarter, which is the gain that was recorded in our statement. The next is the P&C insurance business. Here, the valuation multiple has changed from 8.3x to 11.6x. The equity value has increased on the back of the strong operating performance, but also on the multiple change impact, which was GEL 56 million. The business also paid GEL 5 million in the fourth quarter, bringing the total dividends paid to Georgia Capital in 2020 to GEL 10 million. So accordingly, the value was close to GEL 200 million at the end of 2020. And the fourth quarter gain that Georgia Capital recorded on this business was about GEL 57 million in our income and loss statements. In the water utility business, so the -- at the end of fourth quarter in December, the regulator approved the new tariffs for this business, which are applicable from January 1, 2021. However, as the valuation company looked at the valuations where the DCF now plays a higher rate in the overall valuation, these updated tariffs were taken into account for the value determination. And accordingly, the value was determined to be about GEL 471 million, which translates into an increase in the enterprise value of GEL 85 million to GEL 931 million. And we present 2 details for the users to understand what are the implied multiples from this valuation. So on a tariff-adjusted multiple basis, so this means EBITDA in 2020 has been adjusted to apply the new tariffs. So the new tariffs that are applicable from January 1, 2021. If they had been in force a year earlier, from January 1, 2020, the EBITDA for this business, everything else being constant, would have been about GEL 98.7 million or GEL 99 million. That represents 9.4x EV/EBITDA multiple based on this valuation. Then we also present a normalized 2020 EBITDA. In this case, we leave the tariffs unchanged. So you have 2020 tariffs as they were throughout the year. But 2 numbers changed. This is the water sales. We used pre-COVID water sales to commercial customers, which are 2019 commercial sales. And then we adjust also the generation of the hydro power plants within the business to an average generation or the P50 number for this business that is expected on an annual basis. This results in a higher EBITDA of GEL 110 million, and that translates into a multiple of 8.5x for this business. As a result of this valuation, we have about GEL 59 million valuation gain from the valuation of Water Utility business, and that has been recorded in the fourth quarter gain of Georgia Capital income statement. Then next, we have the Renewable Energy business, which we continue to value this business based on the sum of the parts approach where individual assets are valued at the EV/EBITDA multiple or carried at investment cost. So that said, EV/EBITDA multiple used for this valuation range from 9 to 10.5x, and the average multiple was about 9.7x. So the total value of this business increased by GEL 11 million in terms of the enterprise value. We then deduct GEL 279 million, and we get equity value of GEL 210 million, which leads to GEL 8.4 million value creation or the gain for Georgia Capital. Last but not least, we also present the breakdown of our operational and pipeline assets. So operational assets were about GEL 170 million of the total, including Mestiachala, and pipeline assets were GEL 41 million of the top. The next and the final business is Education. So in Education, as you probably saw, we had very strong performance, and we're -- there has been no change in the multiple in our valuation. So the entire growth in the enterprise value is really related to the growth in the bottom line of this business. EBITDA of the business increased by 47% in the fourth quarter, and the actual margin -- EBITDA margin also reached 45% in the fourth quarter. This was quite a strong performance, but we should also highlight that the fourth quarter is usually the best quarter for the Education just given the seasonality of that business. Otherwise, this GEL 19 million growth translated in GEL 119 million enterprise value for Education business. We then add the investment at cost. These are the lines that have been acquired for the future development and increase of the existing either -- or the increase of the existing campuses. We deduct the net debt and the minority interest and arrive at an equity value of GEL 93 million, which represents about GEL 12.4 million increase in equity value on a quarterly basis and the valuation gain for Georgia Capital. So at the end of my slides, I will touch Georgia Capital's leverage and liquidity profile. So our market value leverage continued to improve, and you see on the slide that the ratio improved by almost 5% during the fourth quarter. And this was on the back of the strong valuation of our portfolio, strong valuations from the portfolio value growth. And when you look at 28.9%, it is now within our targeted range of 30% or less for the market value leverage. At the end of the year, we had about $87 million of liquid funds, and out of these $87 million, $50 million is pure cash sitting on the bank deposits mostly. And then last, we would like to reiterate our guidance for the 2021 dividend inflows from the private portfolio companies only. We continue to expect between GEL 60 million to GEL 70 million dividend inflows in 2021. With that, I will go back to Irakli.

Thank you, Giorgi. To wrap up our presentation before we move to Q&A session. [Operator Instructions] So on the -- in terms of the summary, we had a strong 27% growth in NAV per share in Q4. Year-over-year, it grew. It's up by nearly 3%. We had an outstanding growth in aggregated net operating cash flow for our portfolio companies, went up 63% to GEL 376 million. And our -- the portfolio and cash balance as well of portfolio companies went up by 115% also. Our aggregate revenue and EBITDA went up by 5% and 1% year-over-year. In Q4, it was 6.4% and 4.1% growth of revenue and EBITDA. So we remain at a very strong -- liquidity profile of GCAP and portfolio company is very strong, nearly GEL 700 million in total. In terms of the outlook, we have a -- economy has been reopened, always with some small things are outstanding but it has been reopened. And we expect the economy to grow in 2021 by close to 5% at least. Could be better, but we are actually being conservative due to the vaccine -- unavailability of vaccine. We continue to be -- to have a focus on 2 strategic priorities. One is to divest -- realize in next 18 to 24 months to realize the value of our one large portfolio company. And slowly, next 2 to 3 years, divest from the subscale other portfolio companies. We continue to expect a significant value creation from our large portfolio companies and investment stage portfolio companies. And we expect to remain liquid and tap the opportunities as we come out from this pandemic. So unfortunately, we still -- we are still in a kind of a waiting mode to see how this unfolds, pandemic situation in Georgia. I think the key message of our presentation is that -- today's presentation and result is that basically, we have at Georgia Capital a very [ extremely ] defensive portfolio with very high-quality assets, with strong market shares and extremely talented management teams which have delivered extremely well during this pandemic period. And the result has been, I think, that is -- it was actually above my expectation, and I expected a loss. So we are very pleased with the 2020 results, and we are looking forward to working this -- in the reopened economy in Georgia. Now let's turn to the Q&A session. [Operator Instructions]

Thank you, Irakli. Thank you, Giorgi. Opening up the Q&A session. So the first question comes from Metin. What is the expected time line regarding vaccine rollout for the country?

Indication of what [ Carlos has ] has been saying is that we expect next month to start vaccinations of medical staff. I mean medical staff hasn't been vaccinated yet. And some vulnerable part of the population, we also expect to start in somewhere April, May. And a big portion of the population, at least around 1 million people, will be -- get vaccinated by the end of the Q3 would be a good result. That would allow us to keep the economy open this -- at least in that time line. We hope that if we meet this time line, I think that we will be -- the economy will be in good position.

Moving to the next question. Great results. How are you thinking about borrowing some subsidiary levels? Seems like there are significant maturities in health care and real estate. Are you looking to refinance or to repay this from the high cash balance state?

On health care side, we will be repaying most likely because this is mainly a bridge loan from [ the DID ] [indiscernible] times. On the real estate side, we will probably 50-50. Some of this, we will have some of the refinances we do, and some we will pay down.

Sure. Now what do we expect cash use for the portfolio investments to be this year? And what are our other planned uses of cash in 2021?

So we have announced our capital allocations. We expect the investments to be done in the energy business and the education business around $10 million; next 3 year -- 3 to 4 years, around $50 million for our Renewable Energy and Education businesses. In terms of the reinvestments, there are no significant reinvestment needs in the portfolio companies that will be a kind of usual kind of maintenance and some of the op and CapEx done in different portfolio companies. But we don't expect big investments -- or big reinvestments from portfolio companies.

Please give us an update on the [ Paul ] asset management business and if possible, your 10-year outlook for this new business compared to the current business.

So basically, our idea was, as you know, pre-pandemic, to raise funds and manage the third-party money. And unfortunately, the pandemic has been able to pause that initiative. However, we will resume our asset management [indiscernible] management business once things normalize. And we expect that -- I mean in 10 year times, hopefully we will have a 2 balance sheet business. One is to address the balance sheet of one third-party money, and we hope that to be at similar sizes and more asset-heavy kind of infrastructure, energy type business to be under the third-party money management and more asset-light, service-oriented business to be under our balance sheet.

Moving to the next question coming from [ Thomas ]. I have a question regarding share buybacks. Current cash position at GCAP [ will be ] 20% of market capitalization. At the same time, discount to NAV is 50%. When we can expect to see buybacks and in what amount?

So basically, our investment philosophy includes the buybacks very much because basically we are now [ committed ] to investing because that 50% discount NAV, which Georgia Capital has, we can't really find anything -- any better opportunity in Georgia to invest than in GCAP shares. However, we did mention that we want to see the pandemic situation -- clarity in pandemic situation in Georgia. Right now, unfortunately, there is no -- not much clarity. As I mentioned, there is not even a single vaccine around in the country. So as far as we see a resolution of our pandemic situation in Georgia, we will be able to step up the -- we will be able to address the buyback opportunities. But meanwhile, I encourage you to buy at 50% discount.

The next question comes from [ Victor ]. Good to see NAV recovering in Q4. Could you lay out the company's thinking on capital return to shareholders going forward? Did not see anything in the presentation on this so far.

I guess that's addressed in the previous question.

Got you. Yes. Then we have another question from [ Nicole ]. The portfolio companies in 2020 focused on cash accumulation measures which have significantly increased net operating cash flow. As the economic environment is stabilizing and companies now return to regular operations, should we expect cash generation to return to pre-COVID levels?

I think that the cash generation will be even better than pre-COVID levels. I mean we are up -- in COVID times, we are up in generation -- cash -- operating cash generation by 62%. I mean in 2021, we will be -- our portfolio companies will be investing in the growth of the working capital. So we won't be seeing such a big cost of net operating cash flow obviously, but we will be way above the pre-COVID levels. I think that -- I mean we are growing the top line, and we are growing in the -- even in pandemic times. So I don't see a reason why we shouldn't be. So yes, we [ feel ] confident on outlook for 2021 and beyond these new portfolio companies.

Another question. What was your total maintenance CapEx for 2020, and what do you expect for 2021?

Giorgi, maybe you...

Yes, I can answer that question. So our total maintenance CapEx was approximately GEL 53 million for all our companies, [ Christian ], in 2020.

What do we expect in '21?

So we expect a similar number. Yes.

Another question, also maybe for Giorgi. Could you please repeat your calculation on normalized EBITDA in Water Utility business for 2020 and 2021?

Sure. So for the normalized EBITDA, we used most of the commercial clients' 2019 number, small adjustment for the growth. So it's 2019 water sales, and then we use the average generation within our hydropower plants in that business. So that was the 2 normalizations that was done to the Water Utility business to arrive to the normalized EBITDA of GEL 109.9 million.

Thank you. Can you please comment on the recent political events in Georgia and whether you expect any impact on your business due to the change?

I think we don't particularly expect impact on our business. But what we expect is overall, Georgia, again, has a big track record of to follow U.S. and EU as Georgia perceives these 2 countries -- global countries' strategic alliance it does have in these countries. So Georgia does listen to U.S. and EU, and I think that they will be an influence over that in coming period, in coming times. So yes, I mean, track record has been that and Georgia has very much progressed. So we hope that there will be a resolution -- swift resolution.

Moving to the next question. What do you have left in the real estate and hospitality businesses, and what will you do with it?

I mean we are -- on the real estate development, what we do is we continue to do the projects. And they are very profitable projects, and we continue to do those. And at the end of the day, as we said, it's a subscale business. And if we have an opportunity in the next 2 to 3 years to divest, we will. In terms of hospitality business, we did say that we are divesting, and we are in more active stage on that. I think that resumption of the tourists will be a critical milestone for us to start putting the value on our cash balance in our hospitality. So we expect more shorter-term kind of value in hospitality business once the tourists resumes and more longer-term in real estate deal.

The next question. How do you see the competitive position of Bank of Georgia in the future? TCB Bank published good results recently. And can we expect a similar outcome?

I mean I think that the results will be published tomorrow. Bank of Georgia, as I [ known ], I'm also very curious. So I believe in general that the banking -- banking in Georgia is -- banking sector is always very strong, and we have very strong banks. And I think it will be positive in general. So we are owners of Bank of Georgia. We own nearly 20% of it. We are very happy owners, and we think that Bank of Georgia is also grossly underrated.

I think this concludes the list of the questions we had.

[Operator Instructions]

Can you hear me?

Yes, but not well. Please -- hello?

Yes. I'll try to just answer -- ask a question by speaking and writing. Can you hear me?

Yes. Yes, we do.

Okay. So it's [ Machin from Allen Butte ]. I just want you to please talk a little bit about the selling of your business is going, which -- just some update on -- you want to sell one of the big portfolio companies over the next sort of year or 2. Do you have any interested parties? Which businesses will be most likely to be sold in the next year or so? And have you kind of rethought about what you're going to do with that cash that you're going to raise? Pay it as a dividend or not? Can you just update us on the latest thinking and development in selling -- for a massive [indiscernible] you can sell one of those investment companies in the short term. So just on that, please.

Yes, I mean we are [indiscernible] which companies to sell, and we'll update you as we have some movement and that's all I can comment. In terms of the use of proceeds from the sale, when we do that, we will update you how we're going to do it, how we're going use the proceeds, which I think at this stage is very early because we did say 18 to 24 months in selling this business, so it's pretty far away. So it's very hard to say in 18, 24 months how we'll use the cash.

We have another question coming from [ Charlie ]. Are there any new big assets available to buy from [indiscernible] in the new climate? And otherwise, what are likely uses of your cash?

There are opportunities in Georgia in different segments, including segments where we are investing. We are investing, as you know, in energy and education businesses, and there are opportunities there. There are some significant opportunities as well, big opportunities. And there are also opportunities in other sectors. So I think that we just need to be -- and this new climate obviously may bring us opportunities. And we will be vigilant, say, and watch what we can do in terms of deploying the cash and enhancing the value.

At this stage, we don't have any more questions. Maybe let's wait for another couple of minutes.

Yes. [indiscernible] I guess there are no more questions. So good night ...

We have one question coming through, actually. Just a second. [ Brett ], can you hear us? I think you are on mute.

Can you hear me?

Yes, we can.

Okay. Great. If another big -- or I guess, if there was a big acquisition opportunity that were to arise and your share price is still where it is, does that mean that you just can't pursue it? Or how are you sort of weighing these things?

We cannot pursue it. It's very short. With the share price 50% discount to NAV, there is no way we can pursue it.

Okay. And the third-party asset management business, is that something that's like you're hoping to start trying to raise assets this year? Or is that like a 3- to 5-year horizon type of...

No. It's long term. We won't be able to raise this year for sure. It's a longer-term aspiration.

Okay. And the last question I have is on the debt at the Water Utility business. I guess it increased a bit higher than I thought it would. And was just wondering sort of what -- I guess, what drove the increase in the debt? And what sort of leverage you're targeting in that business going forward?

There is a dollar Eurobond there. So the change, maybe because of the exchange rates, movement on the exchange rate. But we are going to change the debt level there. It's kind of fixed at -- we have -- out of 250, 80-something is allocated to energy business, and the rest is allocated to Water Utility business. And that's going to stay going forward. And as you know, our allowed revenue will grow nearly 40% due to this tariff increase that we had end of last year and actually beginning this year. So that gives our kind of leverage level at the utility level attributed to the company will be very hard to [indiscernible].

So it will be around 4x, and that's around where you -- okay.

It's a little bit less than 4x. More questions?

Yes. Some contact questions from Alex. Alex, can you hear us?

I think we have a question from Alex in the chat. And the question is, "What is your dividend yield of total portfolio now?" And Giorgi, you are -- you are on mute, Giorgi.

Sorry. I think we need to look at this on the 2021 dividend expectation basis. So if we take GEL 65 million on our GEL 2.9 billion, it's around 3% once you include Bank of Georgia, so on the private investments only.

Okay. And we have another question as well.

Yes, we have another question, and it comes from [ Karim ]. Given the trajectory of normalization, why wait to pursue share buybacks? Isn't the time now for GCAP?

I think for us, I think normalization is that the vaccine is -- not vaccinated the country. And we're -- I think -- and we don't know actually how long this whole thing is going to last. I mean we have -- we obviously saw that the government has lifted the lockdown. If we're going back into the lockdown again, at that time, I don't know. So I think there's uncertainty. We just want to be prudent. We don't want to shoot from the hip.

I think that completes the Q&A session. We have gone through the list received from the participants.

Thank you, everybody, for attending our earnings call. And please, stay tuned, and let's see how the economy -- opening up the economy will work out. Hopefully well. And looking forward to our next call, which will be on the back of Q1 results. Thank you. Goodbye.