IFC is anchoring a $300 million green bond issuance by Georgia Global Utilities through a subscription of $40 million, to improve outdated water infrastructure and equipment and expand the country’s water network. This issuance, the largest ever by a Georgian private company, is expected to lead to enhanced water services for 1.3 million people, approximately 35% of Georgia’s population.
Access to, and delivery of, quality and efficient potable water services remain a challenge in Georgia as the country’s aging water infrastructure carries high water leakage rates, estimated at nearly 70% in some areas, and requires significant capital investments. This green bond issuance is expected to help address these challenges.
Georgia Global Utilities (GGU) is the country’s largest privately-owned water supply and wastewater utility company, serving the capital Tbilisi, and cities of Rustavi and Mtskheta. In 2022, the company was acquired and is now majority-owned by Aqualia, a leading global water company that is the fourth largest in Europe and ninth largest in the world by population served.
Proceeds of the bond issuance will be used to refinance GGU’s existing loans to establish a sustainable capital structure and finance the company’s green capital expenditures program, which aims to reduce water losses, improve energy efficiency, and connect approximately 40,000 new customers to water services by 2028.
The bond will be listed on the Euronext Dublin exchange. The European Bank for Reconstruction and Development, Asian Development Bank, and German development finance institution DEG are also participating in the bond issuance.
Aqualia’s Chief Financial Officer, Isidoro Marbán, emphasizes that the bond issue “will serve, among other things, to improve Georgians’ access to a safe and reliable water supply and to adapt the country to the adverse effects of climate change. In this sense, the collaboration with IFC represents an encouraging precedent for future joint agreements in geographies of mutual interest to IFC and Aqualia.”
Despite reforms and some improvements, Georgia’s domestic capital market remains shallow, with total corporate bond issuances of just $800 million in 2023, primarily driven by financial institutions. Thus, companies need to tap international capital markets. The issuance is expected to facilitate financing that is not readily available domestically to infrastructure corporates in Georgia and attract new investors by highlighting the potential of sustainable capital markets instruments.
“Investing in upgrading infrastructure is crucial to improve water utility services in Georgia. IFC’s anchor investment in this green bond issuance aligns with our commitment to mobilize capital for climate-friendly projects, while promoting sustainable growth and improving critical services for thousands of underserved citizens,” said Ivana Fernandes Duarte, IFC’s Regional Manager for the South Caucasus.
To boost private sector growth in Georgia, IFC has provided around $2 billion in long-term financing since 1995, including nearly $1 billion mobilized from partners, in 62 projects in financial services, agribusiness, manufacturing, and infrastructure. IFC has also supported over $394 million in trade through its trade finance program and implemented several advisory projects focused on private sector development.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. It works in more than 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org or www.ifc.org/water.
About Georgia Global Utilities
Georgia Global Utilities (GGU) manages the water supply systems of Tbilisi, Mtskheta, and Rustavi (GWP) and operates energy facilities. GGU owns several hydro power plants with a total installed capacity of 149 MW, including the Zhinvali hydro power plant, the second largest with a reservoir in Georgia. Since 2022, 80% of the company’s shares are owned by the Spanish company FCC Aqualia, a leading entity in the European water supply market, and 20% by the investment holding company Georgia Capital. GGU is committed to sustainable development and environmental responsibility, focusing on green initiatives and strategic investments in the water and energy sectors.
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