Kazakh Investors Will Remain in Georgia, DS CEO says

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The FINANCIAL — Silk Road Group, an investment company involved in development, hospitality, communication and energy projects in Georgia said it was they who hosted Ivana Trump, the former Olympic Athlete, socialite, and fashion model during her two day visit to Georgia.

Trump visited Batumi, the Black Sea city of Georgia and met President Saakashvili during her stay.

She was offered participation in various projects by Silk Road Group: Batumi Riviera, Medea (Hotel Radisson in Batumi), Meskheti and Bobokvati.

Silk Road Group, the Georgian-Kazakh company, was actively involved in bringing Kazakh investments to Georgia during the economic boom in 2008, but after the August War some of its key businesses were interrupted. Kazakh investors were negotiating about sell of Tbilisi Gas Distribution network and Batumi Oil terminal.  State energy company Kazmunaigaz has abandoned plans to build a refinery in Batumi. But later Kazmunaigaz said it does not plan to sell BOT. Galina Gotua, BOT representative told The FINANCIAL there were no intentions to sell company as “it is one of the key businesses.

Recently it has become clear that Kazakhs are leaving the banking sector. According to the sources at different banks, Bank of Georgia is buying BTA.

In July 2009, President Saakashvili expressed his dissatisfaction with the activities of Kazakh investors in Georgia, singling out projects in the hospitality, gas distribution and construction sectors.  Specifically, he criticized the work of KazMunaiGas Service, a subsidiary of the Kazakh national oil company.

But Aidar Utkelov, Director General of the company Development Solutions, one of the arms of Silk Road Group in Georgia, said Saakashvili’s statement was not addressed at them.

Utkelov says Trump’s visit to Georgia was not aimed at replacement of Kazakh investors.

“The complaints of Georgian officials towards Kazakh investors were not addressed at our group. We are not connected to the investors who have postponed their plans of investing in Georgia. We remain an international investment group who will be enhanced by newly attracted investors. No one out of the investors present at Silk Road Group has plans to leave Georgia. All those who entered these projects have remained loyal to their commitments,” Utkelov told The FINANCIAL.

Utkelov is convinced that the President was specifically addressing the group of investors who started construction projects in Borjomi. “But as far as I know they are in the process of executing their projects and are investing the money they promised from the start,” he says.

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According to Utkelov, the Kazakh investors present at Silk Road Group have already invested 250 million USD in Georgia.

Development Solutions has already completed the project of building the hotel Radisson in Tbilisi, and is continuing the building of the hotel Radisson in Batumi and other projects in Adjara and Tbilisi: the Square of the Rose Revolution, residential complex Sakanela, and the Post and Telegraph Building.

George Ramishvili, one of the shareholders of Silk Road Group, initiated Ivana Trump’s visit to Georgia.

Some of the projects in Adjara were introduced to Trump. Among them Medea Hotel (Hotel Radisson in Batumi). Utkelov says that Medea Hotel’s completion is planned for the beginning of April 2011.

“We are running this project according to schedule. Neither the crisis nor the August war affected our plans of development connected to this project,” he says.

“We have already finished construction of underground works at Hotel Medea. That required 60 million USD. We do not need the sum of investments for the Medea Hotel though. They are being totally financed by Silk Road Group and all the business partners who are present as shareholders of this company,” Utkelov says.

Utkelov notes that the company is still adding some additional investors.

“We are forming relationships with such large scale companies or individual investors as Mrs. Trump. However the presence of Trump or her trust in our group does not mean that we are replacing others, we are just forming a new business community that is opening opportunities for further investment in our projects. We are not replacing investors, we are just trying to increase their number. The fact that we are managing to increase the number of our investors is recognition of the reputation and quality of our work. I cannot name the exact number that is necessary for completing our projects, as some of them are still in the planning process,” he says.

Utkelov notes that Georgia remains a very interesting region for investors, also for Kazakh investors. “The main advantage of Georgia is that it is Europe, in Europe you can hardly find a place where large scale investors are not present. Central and Eastern Europe is already integrated with the West. The Government of this country has reached fantastic results in terms of improving the investment climate of the region. Georgia is really a very interesting country for investors. We are glad to welcome all additional foreign investors who are already present in our group,” Utkelov says.

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Hotel Iveria SAS Radisson is so far the only completed project run by the company Development Solutions. Additionally the company has three objects in Tbilisi: the complex Sakanela, Savane, the square of the Rose Revolution and the Central Post Office (Telegraph business centre).

“The Telegraph business centre is the biggest priority for us out of the Tbilisi projects. We are progressing in all our projects’ development. Currently the Telegraph project is moving from the phase of initialization to the phase of planning. We hope to complete the phase of planning by the beginning of March 2010 and after that to move to the phase of its execution. The main goal would be getting an A class project and according to our current approximate estimation, we plan to complete it fully in 15 months time after completing reconstruction and putting it on the market,” Utkelov says.

The Sakanela and Savane projects are currently in the process of projection and design. Utkelov says that as time progresses and everything changes, including trends, the ideas for these objects from their conception is constantly being reviewed. “In the case of Sakanela, we decided to develop the niche of commercial objects more than residential, as was planned from the very beginning. We consider the fact that the demand for residential space has decreased and will supply more the current demand. At the same time we will be able to supply the demands of the municipality, with whom we totally agree in the case of very large scale projects. We will make them more elegant, cosy, and less bulky,” he explains.

Presently the company is conducting analyzes to find out what kind of combination of businesses will be best on Sakanela. “There will be objects of retail sales, restaurants, also a line of boutiques, and they will totally supply the current demands of the European market, the performance of so called street shopping. Thereby we will start a culture of shopping malls here,” he says.

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