We'll talk about portfolio company results and valuation of portfolio companies. Giorgi will put in the income. We'll wrap up. As usual, we'll have a Q&A session in the end. You can obviously raise your hand and ask the question or type your question. However, we do prefer you to raise the hand and do more interactive Q&A. To give you some key highlights of the quarter, NAV per share is up 8.2%. In Q3, in pound terms, it's up 25.5% t hat's due to the pound weakness and lari strengths. That was the result of the large increase in NAV per share in sterling terms.
We continue to receive the regular dividends from our portfolio companies. We received around GEL 32 million in Q3. In total, year to date, we received nearly GEL 85 million. It's nice to see a continuation of the dividend inflows after the pause we had during the COVID times. The dividends have been flowing pretty steadily to Georgia Capital. We also did in Q3 buyback of our Eurobonds. We bought back around more than $100 million of bonds, 65 of which we have canceled. We are pleased with the final purchase of our bonds, where we bought $0.88 on a dollar in the Dutch auction, a modified Dutch auction, which we have done at the end of the quarter.
What is probably most pleasing is that in NCC ratio, our net capital committed ratio has decreased by 2.6 percentage points, and actually after the end of the quarter, it decreased even further. Right now we are at 22.2% NCC ratio. It has been decreased substantially, more than 10 percentage points at least since we started to track. At the end of last year, debt ratio was around 32% and we had a substantial decrease there. As you know, our target is around 15%, where we would be able to more step up our capital return efforts. Let's return the presentation now to Nino, who will talk about the macro update.
Hello everyone. Yes as usual, I will do the brief macroeconomic overview of the country, and of course, we will be more than glad to answer your questions during our Q&A session. Despite the fact that we have significant uncertainty in the world, driven by the hawkish central banks and the tightening financial conditions, causing the recession probabilities to accelerate, Georgian GDP is increasing by double digits, it 's for the second year. Last year we had about 10% growth, and now this year, in nine months, we have, according to the preliminary estimates, we have 10.2% growth. The growth is mainly driven by the external and domestic factors. From the external side, we have recovery in our FX inflows, partially driven by the migration impact.
Like, we have remittances which surged by 65%. Excluding Russia, the remittances was still up by 16%. We have tourism revenues, which in nine months recovered to 97.5% of 2019 levels. During the July-September, the recovery was above 100%. We have exports, which is growing quite nicely. In nominal terms, it increased by 37% but there are the significant drivers that's copper, ferroalloys, and fertilizer prices. We are up, which drove the nominal terms growth to be high, but in real terms also, exports continue to increase, supporting our economic activity. From the domestic side, we have significant credit expansion. In the first half, loan growth increased by more than 18%, excluding exchange rate impact.
Now, as of September, loan growth is up by 13.7%. The growth rate kind of moderate on the back of tightened financial conditions, but still quite significant number and robust and helping domestic activity. From the fiscal side, fiscal policy kind of moderate, but still supportive as capital expenditure and current expenditure were up in nine months compared to the last year. We have current expenditure, which is by 9%, and total expenditure by 13%. From the revenue side, the tax revenues increased by 25%, which is driven by the significant economic activity. Due to the fact that fiscal policy intends to return the fiscal deficit below 3%, they are moderating this time.
Of course, we have strong consumer and business sentiments which support our economic activity. In the below chart, you can see our nominal GDP in GEL and in USD terms. In GEL terms, we expect nominal GDP to exceed GEL 70 billion. In dollar terms, we expect to be close to $25 billion, which is quite a positive development these two years on the back of double-digit growth of real GDP as well as the significant exchange rate appreciation. In dollar terms also, GDP is looking quite attractive, and the trend is quite significant. On the next slide, we have some comparison. Recently, in September, International Monetary Fund update their outlook.
According to their projections, Georgia's GDP is expected to increase by 9%, which is the eighth highest real GDP growth forecasted in the world. Looking at the countries which are above Georgia, like, in terms of GDP growth, those are the countries which are, like, the mainly Caribbean region countries, small islands or Guyana, which recently discovered oil reserves, and they are enjoying, like, double, on average 30% growth in 2020 and 2021. Like the Fiji, which had the three-year of recession also Europe, which enjoying high energy prices.
We are here in the top ten, mainly, Georgia's growth is driven by the external sector recovery from the inflows, and of course, supported by the migration impact. Just on the next chart, we have the GDP per capita in dollar and in purchasing power parity terms to highlight the fact that we have a sound macro framework and the business-friendly environment, and this solid growth is not kind of temporary. To highlight that fact, we are showing the chart. In terms of comparing to our regional countries and the Baltic states, in level terms, we are still below the Baltic states, for example, but we have the highest growth in GDP per capita in PPP dollar terms, which is, of course, approaching the supported by the sound macro policies as well as business-friendly environment of the country.
On the next slide, now we can talk about the exchange rate. GEL is back to the pre-pandemic level. Despite the fact that dollar strengthened significantly on the back of hawkish Fed and increased appetite for the safe haven assets, the dollar appreciated by almost 15% year to date, but GEL appreciated against the dollar by more than 13% on the back of recovered FX inflows, rebounding tourism revenues, immigration impact. From the domestic side, we should highlight the tight monetary policy. National Bank of Georgia start to tighten since spring 2021. As there was significant supply side pressures were not abated by the weak demand, and so they start to increase their rate in order to curb the inflation expectations. The total cycle up to date is, like, 300 basis points.
We expect National Bank of Georgia to keep the rate until they will see significant easing of the inflation expectations. This tight monetary policy and significant interest rate differential was supportive for the loan growth in FX loan growth, which was also supportive for the exchange rate from the domestic side. We have also, of course, rebounding economic activity, which supports retail lending. In terms of lending, this interest rate differential led FX lending to be more attractive. From the domestic side, mostly the monetary policy and credit activity are key factors supporting the appreciation.
From the external side, again, we have the significant FX inflows, like, supported by immigration impact, which of course, all of these factors are supporting, GEL in Georgia, which is back to the pre-pandemic level. On the next slide, just— we want to give you some sense about Russian migrants. According to the National Bank of Georgia, as of September 13, we had, there were more than 100 Russian residents in Georgia. Of course, we don't know the share, intending to stay for medium to long-term in Georgia, but there are other data which, kind of give us, more clarity about the, migrants which intends to stay for a medium to the long-term period. Like, the, total, migrant...
Like, the total amount of new accounts from Russia, Ukraine, and Belarusian residents was 83,500 since war. There are 83,500 additional banking accounts in our system opened by Russians, Ukrainians, and Belarusians. You can see on the chart with the flows. In September, there was, like, second wave of immigration after the partial mobilization were announced by the Vladimir Putin. We also have the data for the total amount they are deposited in our banking sector. Since war, there are additional $635 million deposited by Russian, Ukrainian, and Belarusian residents.
In the next slide, we have inflation trends l ike, as you know, inflation is, like, very hot topic and the key variable affecting the central bank decisions around the world and the capital flows, and reading the activity in the capital markets. Georgia inflation, you can see the chart that it kind of peaked in December 2021, started to decelerate, but quite modestly and slowly. The inflation is still double digits, September, October inflation was 10.6%. You can see that core inflation does have this upward trend. It is the same factors we are seeing the inflation in Georgia, like the oil and utility prices were the significant contributor in our inflation.
We see in the international market that this kind of eased and which have a positive impact at least to the base effect. We expect inflation to kind of soften in 2023. On the next slide, we have this debt chart which we want to share that we think that is very important. The public debt is expected to fall below COVID level, COVID time levels, like below 2019. According to the current budget, the government expects public debt to decline to 39.5%. We have so there was a 40% debt in 2019.
In terms of the external debt, external debt is also expected to fall below 2019 level, which is very important for Georgia and its resilience to external shocks and its like strength of the external balance sheet. Mainly the debt level declined on the back of double-digit growth of the gross domestic product, as well as the positive trend and the significant appreciation of USD/GEL. On the other side, the government expects fiscal deficit to fall 3.2% this year and below 3% from the next year. This was the key kind of main slides we wanted to share with you. We will be very happy to answer your questions during our Q&A session. I will hand over to Gilauri for the next presentation.
Thanks Nino. Let me start the Q3 performance overview. Basically two probably highlights of the quarter on top of the what I have already mentioned is that our portfolio companies issued new debt in this difficult market, basically. Renewable energy business printed $80 million bond for 7% yield t hat's at five years, and importantly, it's callable after year two. We also have a housing development business which successfully rolled over $35 million bond at 8.5% coupon, maturing in two years' time. That's also very successful transaction. I'd like to thank our management teams at renewable energy and housing development business for this achievement of getting these bonds printed.
One thing to add that renewable energy business, by printing $80 million bond, we have fully completed our phase two of our water utility sale. As you know, we had a bond attached to water utility and the renewable energy business, and we have successfully repaid that bond. We have demerged the water utility and renewable energy businesses to complete this transaction with sale of the 80% of water utility business. That bond was critical to finish off the full cycle of our transaction. The next one, a ctually I mentioned this one already at buyback, what we will be doing.
We still gross amount of bond after the buybacks we've done is around $263 million, $10 million worth of bonds is in our treasuries. We will be buying back here and there as we see the pricing of our bonds going forward. On the next slide, the NCC ratio. As you see, we are down to 22%. As I mentioned, you know, we are targeting 15% NCC ratio. However, with increased interest rates in the world, we are not, we do not have a big appetite for debt, so we'll be aggressively reducing debt even further, as we go along. Now on this slide, we have a development of the NCC over time.
You see, we have significantly decreased the ratio during the past nine months, nearly 10 percentage point, as I mentioned before. Again, this the 15% NCC ratio, which we have as a target in this high interest rate environment, we really want the part of the debt to be smaller in this ratio base. Now looking at the revenues of our portfolio companies, on nine months basis, you see a 35% growth of the revenue year-over-year against 2020, and year-over-year 10% growth.
One thing to mention that hospitals and clinics did underperform massively due to the COVID revenue is gone and we are basically loading our hospitals and clinics from scratch. That had an effect, a big effect. In Q3, the growth is compared to 2022, 2020 is 34%, and year-over-year is nearly 11%. Sorry, nearly 11%. On the next slide, we have an EBITDA development. As you see on nine months basis, EBITDA is down year-over-year by 7.4% to GEL 186 million. This is mainly due again to hospitals and clinics t hat's where we have a big underperformance.
Unfortunately, October continued like that. Year-over-year, we are still down in October. We actually are expecting. We expected the recovery to happen in Q3 and Q4, but unfortunately it's not happening. It's more like a for next year thing to see the recovery of the patient inflows. Q3 again, we have a small growth in EBITDA, and well, 2% growth year-over-year and 7.6% growth, compared to 2020. On the next slide. With the cash flow generation is strong. Our cash balance has increased by nearly GEL 40 million in the quarter to GEL 300 million. Operating cash continues to be strong.
We expect for full year the strong cash flow, net operating other than in our healthcare services, across our portfolio companies will be keeping stronger cash flow generation. On the next slide, we see an NAV per share breakdown. The growth was, as we mentioned, 8.2%. The operating performance was negatively contributed to the NAV growth i t was -4.7%. Again, the hospitals and clinics was the main cause here. There was some multiple and FX change which contributed positively around 6%. The good thing is that Bank of Georgia share price has increased quite significantly. Water Utility continues to perform well, and therefore our valuable and listed portfolio has grown, contributing 6.1 percentage points in growth in our NAV per share.
The rest, nearly 1%, is the buybacks, which we did in Q3, had a positive impact. You know, operating expenses and the liquidity management basically offset each other, - 0.4% and + 0.4%. What is worth mentioning is that after the end of the quarter, if you look at the Bank of Georgia Group PLC price appreciation and GEL strength, our NAV per share grew even further to GEL 60.36 , which is more than GBP 19.3 , which is pretty far away from our share price. It's getting farther and farther away from the share price. On the next one is basically I'll let Giorgi to talk about our portfolio companies and valuation, and in the end, we do the wrap up and Q&A. Giorgi please.
Thank you Irakli. Hello everyone. I'll start discussing with the portfolio evaluations. This quarter, in the third quarter, we performed valuations internally based on the similar methodology that our external valuation company applies every six months. On this slide you see the breakout of our valuations. The portfolio value was GEL 2.8 billion, which is around $1 billion, and 26% of our portfolio was concentrated in listed and observable portfolio. Around 48% was within the large portfolio companies, 16% in investment stage, and the rest was the other portfolio, around 10%. Our largest investment continues to be retail pharmacy as of the end of June, which made up 24% of our portfolio, and that was valued at 8.6x last twelve months EBITDA multiple.
We had hospitals business valued at above GEL 400 million. The insurance businesses together made up slightly less than 10% or GEL 255 million. You see all the multiples here for the key businesses. We will walk through each you know valuation on the next few slides for our key businesses. But at the end on this slide, I would highlight that Bank of Georgia was valued here at close to GBP 20, which is where it was trading at the end of the third quarter versus it's trading at GBP 24 now, and it made up around GEL 600 million value on our balance sheet, and it was 21% of our gross assets value.
During the third quarter, the water valuation, the water utility valuation had not changed materially. It remained around GEL 153 million that we had in the previous quarter. We update the water utility valuations in more deeply every six months. With that, on the next slide, you see, you know, how the portfolio value changed during this quarter. We had around GEL 150 million increase in the portfolio value, vast majority of which came from the appreciation in Bank of Georgia's share price that contributed around GEL 142 million to the portfolio growth. Large portfolio companies declined by 25 million GEL t hat's due to the hospitals business that we will see later.
Investment-stage portfolio companies increased by GEL 11 million, where we had a strong performance in renewable energy and the education businesses. Other portfolio companies also increased by GEL 24 million, largely due to the strong performance within the beer business and the auto service businesses. Now we will look at some key businesses, looking at their, you know, operating performance as well as the valuations. Starting with the retail pharmacy business that it continued to grow its pharmacy chain during the fourth quarter. We opened two new pharmacies and two new franchise stores. Actually, in the third quarter, we opened the first franchise store in Azerbaijan, which is a The Body Shop store that was opened in Baku. This business continued to grow, but it is still ongoing.
The price recalibration that happened as the result of the Lari's appreciation against dollar, so that's impacting the gross amount of revenue. However, the Lari's appreciation is still positive for the business, as it means that they are also generating FX gains within this business. Also they had the transition of the wholesale business that moved from the pharmacy business to the hospital business last year. It's still ongoing through that transition. However, EBITDA was down here by 12%, but that was largely because of the operating expenses that the expansion has been you know impacting the operating expenses temporarily. We expect that impact to go away in the next few quarters.
Overall, this business continued to grow in this quarter and has a very strong outlook, which means that on the valuations, as you see on the next slide, there was a slight increase in the enterprise value for this business. Overall, we saw that the equity value, you know, increased by GEL 6 million. Largely, the value of this business has not changed materially during this quarter, only GEL 6 million gain that was, you know, supported by higher cash generation, for example, net debt decreased, but also because of the strong outlook that goes into the DCF.
Next is the hospitals business, and as Irakli discussed earlier, the transition away from COVID and the termination of the agreement with the government earlier in March has continued to impact this business during the transition. That meant the revenues were down by 18% during, you know, this quarter year-over-year, and EBITDA was down even higher by 45%. As a result, this has been a result of the, you know, lower number of admissions and the lower occupancy rate during the third quarter. The third quarter tends to be, you know, the slowest quarter for this business generally, given the weather people elect not to have too many elective surgeries or elective care in the third quarter.
As a result, because of the drop in the EBITDA, we have a decrease in the valuation of this business that you see on the following slide. The enterprise value decreased by 5%. Net debt was also, you know, negatively impacted. Overall, we have a 10% reduction in the equity value of this business. It came down to GEL 432 million. Because of the drop in the LTM EBITDA, when we recalculate the value using DCF, we see that the multiple has actually increased from 10.5x to 11.4x. Overall, we have a value, equity value reduction from this business of GEL 45 million.
Next we have the insurance businesses, where both medical and the P&C insurances had a strong quarter. They had a double-digit growth in revenues. They also grew double digits on a nine-month basis in revenues. When it comes to the net profit, medical business had very, you know, strong quarter. The net income grew to GEL 2.3 million. P&C insurance also benefited from lower combined ratio from the growth and, you know, in the economy, which was also supported by the growth in the credit life insurance issuances and the agricultural insurance lines. That meant that they had a record amount of profit in the third quarter, which was GEL 6.6 million.
Until before, the record number was around GEL 5 million. They had a very strong performance, t his really high growth in this business, which in the next slide for the P&C business. The value of this business grew by close to 7%, as the LTM net income for this business also grew by close to 10% from GEL 18 million close to GEL 20 million. We had around GEL 14 million gain from this business within our NAV. On the next slide, you see the strong performance of the renewable energy business. As we said on the previous call, we are now presenting the dollar terms, which is, you know, pretty much the functional currency of this business.
For the renewable energy, you see that we had a very strong electricity generation in the third quarter. The generation was up by 19%. On top, the average sale price during the third quarter was up by around 9% versus last year. These two contributors resulted in, you know, 24% growth in the revenues in dollar terms in the third quarter versus last year's third quarter. The EBITDA growth was even higher. It increased by 30% in the third quarter. Very strong performance of the renewable energy business, which is also the case over the nine months as well. On top, this business paid us around $1 million dividends in the third quarter.
On the next slide, you see that this strong performance resulted in a higher valuation for this business, although it was, you know, higher by about 5%. The total value of this business is now $61 million, where 47 is in the operational assets and about $14 million is in the pipelines. On the following slide, we have the performance for the education business, which had a stellar quarter. One key highlight here is that in the third quarter, this business signed up close to 1,966 new learners, which you know, we intake within our schools, and they will be learning for the next year, and we will be recognizing these new revenues over the next, you know, nine to 12 months.
Usually, the third quarter is low on the revenue generation because there's only few days in September when the revenue gets recognized given the summer holidays. Even with that, the business revenues were up by more than 100%. You see in the third quarter, the growth over last year and in the EBITDA terms, even though it was breakeven, it was still, you know, GEL 1 million higher than the GEL 1 million negative EBITDA that we had in this business. With this new intake, which makes up, you know, about 30% growth over last year, the number of learners we have in the schools is now in excess of 4,000. The aggregated utilization rate for this business increased by, you know, by 10 basis points to 73%.
When we look at the, you know, capacity utilization of the existing schools without the, you know, the additional growth that we have this year and the last year, the capacity utilization is already 100% there. We expect this, you know, new intakes to have continued impact on the revenues in the following quarters, and, you know, continue to grow this business remarkably in the coming quarters as well. These new additions and the strong performance also had positive impact on the valuations. As a result of that, we have about, you know, 6.5% growth in the enterprise value of this business.
We also have a reduction in net debt as the new sign up, new intakes meant that people usually in our schools, most of the schools, prepay for the full year tuition. The net debt was down by 17%. When we look at this in aggregate, our value in this business increased by close to GEL 12 million, and the multiple was actually down from 15.3 to 14.8. Overall, the equity value was up by 8%. Next and the last one is the clinics and diagnostics business, which is similar story as the hospitals that continues to be impacted by the transition from COVID world to non-COVID, especially on the back of the termination of the COVID services agreements by the government.
Here, you know, aggregated revenues were down by 30%, and the EBITDA was down by 78%, which also had a negative impact on the valuations that you see on the following slide. The valuations were down by, you know, GEL 5 million in the enterprise value and around similar amount in the equity value. The multiple increased here more significantly than in other businesses as on the back of the temporary decrease in the LTM EBITDA. With that, I think we complete the individual portfolio results and valuations and slightly about the liquidity and the dividend income outlook. Our dividends to date are around GEL 85 million.
Our you know now guidance for the full year is GEL 94 million we expect to collect, from which, you know, GEL 85 million has already come in. There is GEL 9.5 million that we expect to collect in the fourth quarter from renewable energy primarily and the insurance P&C insurance business. The growth over last year would be around 26%. We also look at you know dividend income per share. As you know, you know, we have bought back and canceled around 6.5% of our share capital over the last 13 months. The growth on a per share basis is even higher, and it's around 31%. Now in terms of the liquidity, we have a strong liquidity.
You know, our liquidity increased on the back of receipt of $180 million from the water utility business. At the end of September, we had $134 million t hat does not include the $90 million worth of loan that we had issued to the renewable energy business, where we got back $80 million in October. If you look at the adjusted number for that, we have $152 million liquidity now, and the gross amount of debt has decreased from $365 million to $300 million as we canceled $65 million worth of our debt issued. With that, I'll go back to Irakli for the wrap-up.
Thanks Giorgi. As you see, very good performance across the portfolio companies other than the healthcare and the clinics businesses. Only just to reiterate, NAV per share is up more than 25% in sterling terms. Dividend continued to flow, as Giorgi mentioned. We did nice buyback of the Eurobonds and we canceled some of the bonds as well. Most importantly, our NCC ratio has decreased at the beginning of the year by 10 percentage points to 22% and we have a strong momentum there. We will continue to focus on our strategic priority, which is basically further decreasing our NCC ratio. That is our top priority, especially in the high interest rate environment. The debt is not good for us.
We would be aggressive there, for sure. We expect the significant value creation to continue out of the post-COVID, especially we are having expectations for our healthcare business and the clinic business to turn the corner. Especially I think it's important that the macro is strong, and we expect it on the back of the strong macro to benefit our portfolio companies even further. With this, let me turn to the Q&A session. Shako, maybe you will.
Thank you Irakli.
If somebody's raising their hand.
Yes. We have a couple of questions. Just a reminder, if you have questions, please press the Raise Hand button in the below, or you type your questions in the Q&A panel. We have a question from Gavin Trodd. Gavin, please go ahead.
Hey guys, t hanks for taking my question and great results as always. Just three questions from me, if you don't mind. A couple of them, I guess. People asking, why don't you cancel the rest of the Eurobonds yield? You've canceled sort of around about the $65 million to buy the whole amount of $100 million-$300 million, but I do wonder why do you keep some of these bonds. Second question, the stripping out of the NAV per share. Stripping out the shares owned by the trusts. So basically that makes about, if I'm not mistaken, about 1 million shares. I just wonder about the logic behind it.
The third reason is, if I'm getting the press release correctly, and please correct me if I'm wrong, but you extended a loan to the renewable business in September and then post the issuance of the new debt in October, the renewable business basically paid you back. Is that right? If it is right, why such transaction in September to October in such a short period of time?
On canceling the established first one, why would you not cancel more? We wanted to keep the bond size $300 million because the bond is in an index. If we would cancel more than $65 million, bond would come out from the index which our bond investors would suffer with that one. This is purely to keep our bond holders happy.
Yeah. Technically, yeah. Makes sense.
Not to—w hich index is it part of? Do you happen to know?
Sorry?
Which index, this bond is part of? Do you happen to know?
I wouldn't know but I hire
It will be the same index. It will be the same JP Morgan index.
I see. Okay, t hank you. It makes it more liquid, which is, you know, what investors in the bonds like?
I mean, maybe it will be changed, but basically we saw that, you know, if it's an index why would we cause it to come out from the index?
Yeah.
You know? That's one. On how we calculate the treasury shares, why we are not including. The management shares which we are talking about is not. It is awarded but not vested, so we have not worked for it. When we work for it, we hope to make more money with that for the investors. You would have more per share, NAV per share gross t hat's the logic. It's not the management's yet. We need to work for it. We cannot really include something which we're gonna invest in the future t hat is. On the third one was the. What was the third one, sorry?
The renewable business.
Renewable. This is basically we had to repay with the agreement with the buyer of the water utility business. We had to repay the bond, which was outstanding, the water utility and renewable energy business which were together guarantors of $250 million bond. We had to repay that one. GCAP gave the bridge to the renewable energy business, which next month they printed their own bond. They repaid back.
It's just timing mismatch. I see.
It's basically a mismatch, yeah. I mean.
I see.
We could not have printed, to be honest, in September because the company was not ours. We didn't have full control over the company. Anyway, this is technically. It's a bridge we provided, and then it was repaid.
Makes sense, t hank you.
Okay, t hanks. Next question.
Thank you. We have Al raising hand. Al, please go ahead.
Can you hear me?
Yes.
Hey Al.
Hey Irakli. Thanks for the call and good numbers as ever. I've got two questions. One, could you talk about how your businesses and are being affected by the Russian immigrants coming in, and whether you see opportunities there additional to what you have or anything, you know, along those lines? Then secondly, obviously Bank of Georgia stock's been doing well. Can you just talk about, you know, what your thoughts are on your medium term strategy of your 20%+ stake there? Thanks a lot.
Thanks Al. I mean on the Russians coming over, we had a positive impact across the whole portfolio companies. The healthcare as you could see. The opportunities are, if you look across the board on consumption, big growth in Aversi business, the consumption has increased dramatically. Schools also had a positive because it has increased quite significantly. If you look at the consumption driven businesses or consumer driven businesses, basically it's more, it has an immediate impact, immediate positive impact. And precisely, I think we are looking at different opportunities in education, it will be helped some more professional help there.
As you know, it is not the progressed IT hub in the world, but it's becoming one of the best now thanks to the Russian IT specialists. Regarding the Bank of Georgia stake, you know, it's been moving in the right direction. Yeah, I think that we don't have any plans on Bank of Georgia stake as we see an analyst coming out with very big target prices than it was before, GBP 40 +, and I think it's even more. It should be more than that. Let's wait and see the results. I think that our plans for Bank of Georgia in the medium term is basically hold and enjoy the dividend inflows.
Thanks a lot as ever.
Thanks S ir.
Thank you. We have a couple of questions in the Q&A panel. The first one is from Bren. Hi all, r egarding your comments about NCC ratio and higher rates environment, did I understand correctly you aim to reduce the net debt below the total of planned investments plus liquidity buffer or investments plus buffer plus buyback commitments. For a sizable buyback, should we expect an NCC ratio of 50% before the buyback commitment or including the buyback commitment?
No, i t should include obviously the buyback for going to start with. As I said, you know, the NCC ratio consists of two things or maybe three things mainly, right? It's a net debt. It consists of the investment commitments, and it consists of the buffer. Buffer is buffer. Buffer, we need to have a buffer all the time. We are looking at now two parts of that. One is the investment commitment and the debt, net debt, right? In this interest rate environment, as it has grown, we have set this NCC ratio et c., in May, when interest rate wasn't that high. Now with these very high interest rates to where we are right now, our appetite to hold debt has been decreased substantially.
Basically the 15% is over the cycle and we need to look at it. It's not the scientific approach here. Obviously we need to be significantly lower than 15% in order to commit for the buyback, right? Plus, we need to make sure that our debt is reduced substantially so that we don't have a cash burn. Because for instance, if you take right now the market price of our bond, it is traded at yield to 2x what we have printed. Even if we halve the gross debt right now, we would be paying the same interest as we were paying on $365 million debt.
This way, I mean, we need to be more aggressive in reducing this because if we're gonna have the same cash leakage, I think that the capital return policy to the investors, you know, we won't be there. This high interest rate obviously is very prohibitive for us to step up any buybacks.
Thank you Irakli. Next, I think Henry Dixon is to ask a question. Henry please go ahead.
Hi. Sorry, just to check you can hear me.
Yeah.
Yes we can.
Yes Henry.
Thank you. Sorry, just to keep going on this. First question is gonna be a little bit repetitive around the deleveraging, which by the way, I completely approve of. I'm just trying to think around the options of deleveraging. It seems you would have the ability to buy back your debt, and I take your comment around the bonds yielding 11%. I would sort of note that that is the majority of it is clearly the interest element, but the balance is the pull to par, and you're only responsible for the interest rate element. I'm thinking, is it credible in order to deleverage for you to be holding cash, getting ever greater interest rates at the bank? Or do you need to deleverage by generating cash and buying back the bond?
I have one more question after that. I'm sorry that's a repetitive question, but it just seems if I look at.
What do you mean Henry? Sorry. The generating the cash, you mean the more you getting more dividends out of our portfolio companies and deleveraging like that?
I'll tell you slightly better what I mean. Let's say the bond, okay? Trading at 93p in the pound, maturity 2024.
Yeah.
The coupon is six. Okay?
Yeah.
Essentially your interest cost is 7% in a year. I get the yield to maturity, taking the total return of the instrument to 11% or 12%. Broadly speaking, you need to pay the interest and you are always going to pay the capital. I'm just thinking about it. It seems to me with interest rates in Georgia at 11%, you have a very valid capital arbitrage to hold gross cash against gross debt and not mobilize cash to buy back debt.
Yeah. I mean, if you can buy back, you mobilize. Right now we cannot buy back more debt, but I think we will buy back more debt. I think the point here is that for us it's very simple math, right? Let's say that the coupon which we will need to pay on the rollover in March 2024, the bond matures, right? We're gonna roll over the bond. If you roll over the bond, our gross bond we will need to roll over most likely is around $175 million to $100 million. It's $175 million is too low. Let's say $200 million we need to roll over.
We will be paying the same coupon cash amount, total cash amount as we are paying on $365 million of debt. Which means we will be so heavy in the cash payments that we cannot really provide meaningful capital return policy or any capital return policy, because we will have the same cash leakage at $200 million dollar bond as we have at $365 million dollar bond.
Okay. No, totally understand. Okay. I thoroughly approve of your capital management, A, on the execution, B, that you've turned it to the debt. I was just trying to think around, if you like, interest rate arbitrage, but I completely understand now, and thank you for that answer. Then I guess your comments around the bank. I was just sort of your view on how the disposal of the utility has gone, how your partner is responding to that and the outlet maybe for further disposals from what I would say is the unquoted element. Because I think the more that you can prove up the unquoted element with regards to third party verification, which can come in the form of disposals, I think that will further serve to unwind the discount.
Yeah Henry, absolutely. Basically, I mean, we have done the transaction on the water utility, which was 30% premium to our NAV, which was basically three times more than what market was valued, literally three times at that time. Since then we have proven to the market that our NAV is actually, you know, quite, we are conservative in NAV. The discount on NAV has widened since then. Right? We obviously would rather put the price on the unquoted portfolio and use that one for the deleveraging than the quoted one, right? Especially the quoted one is grossly undervalued in our opinion.
Hence my question with regards to the probability you would ascribe to third party verification in the form of a partial sale to the unquoted element in the portfolio in, let's say, the next 12 months?
Yeah. Basically, that's what market is telling us, right? I mean, we speak the language of the market, but sometimes we don't understand, you know, the reaction. We understand them, but I don't think they understand us.
Okay, t otally understand. Very good to speak to you today Irakli and I wish you all very well. Thank you.
Thanks Henry. I appreciate it.
Thank you Henry. So we have a couple of questions in the Q&A. The first one is from Jonathan Lewis. Congratulations on another set of excellent results. I am slightly in two minds over the NCC results. While it shows increasing operational freedom, does it not also suggest that the business is running out of things to invest surplus? Perhaps you could clarify how you see it. The follow-up question is, I recognize that this is not the company's plan, but as one of the biggest of the Georgian investment market is non-capital intensive areas, one that you could have clear differentiating, differentiation in. That's the question from Jonathan Lewis.
Thanks Jonathan for the question. Basically, I think that we can have a long discussion on that one, but I mean, right now, I mean, we have a investment pipeline in our portfolio companies in asset light kind of industries, which will enlarge our pharmacy chain, enlarge our clinic chain, and enlarge our education platform, which are these three growth areas which we think we will be investing and we'll be growing. However, any meaningful investment in Georgia makes no sense when our share price is 70% discount to the NAV. We believe in our NAV. We value this NAV in a way that we believe is pretty conservative.
What can we find a better investment in Georgia than Georgia Capital shares itself? As I said, the only thing that holds us back from making a bold moves in that direction is the leverage that we have on our books, especially in the context of increased interest rates which would result in a higher cash outflows from the GCAP. That we will be delighted to see our share price discount to NAV shrink. Which would allow us to bring more interesting investment opportunities. In general, to be honest, on new investment opportunities, we don't really like to go into the new sectors. We would like more to do our bolt-ons, to be honest. That's more our kind of our current thinking. I hope this answers your question.
Thank Irakli. The next question is from Dan Cartridge. Why do you think the trust continues to trade on a very wide discount, and what can you do to help narrow it on top of 5x?
Dan thanks for the question. You know, I don't know why the trust continues to trade on a very wide discount. To be honest, that's kind of, for me, a mystery, but you know, maybe market participants would know better. What we can do to narrow this discount, other than the buybacks, is what we talked to Henry, putting the price on the unquoted part of our portfolio.
Thanks Irakli. We have a couple of questions that came through the email from Simon Butcher. I think you already addressed the first one, but I'm gonna still read it out. So the question is, would GCAP consider monetizing some of the BGEO shareholding to take advantage of the extreme discount to NAV? With the increased market cap liquidity and interest, one would imagine that there could be significant appetite for a decent block trade with BGEO buying back shares. Our ownership of BGEO is growing. Could we consider at least keeping our ownership percentage static and use the proceeds to buy back GCAP shares? That is the question from one side.
We definitely are not going to sell Bank of Georgia because we think that it's grossly undervalued. Yes, I'm gonna repeat that again and again.
Okay thank you. The next one is, would GCAP consider committing to buy back enough stock to cover the management performance rights? Obviously, the rights improve alignment and are good incentives, but when granted at such a huge discount to NAV, the cost to shareholders is much more significant.
Sure. We are buying back. We are buying shares for the management. We are not printing new shares. I fully understand your concern, and we are doing it and we will do that, especially on this high discount like that. If discount not, if we go into premium to NAV, then we may print and not buy.
Thank you Irakli. I think, there are no more questions outstanding for now. Milos wants to ask a question.
Sure.
Milos please go ahead.
Yes, t hank you for taking my question. I just wanted to ask if you can provide us with an update on the disposal of the subscale businesses, if there's anything new you can share or if you can tell us if you're in any active discussions in this respect. Thank you.
Thanks Milos for the question. It's very hard for me publicly discussing what we are doing privately. It's really very hard. I cannot really. We are working on it. We have a full commitment. We think you saw that the other businesses, subscale businesses performed well. They actually doubled the EBITDA, literally doubled year-over-year. Operating performance, we are extremely happy with that. We want to extract the maximum out of this and we don't want to be a poor seller for sure.
Okay, t hank you.
Thanks.
Thank you. I think there are no questions for now.
Thanks everybody. Maybe we wait for a couple of minutes. If there are no further questions. Thanks Shako and Giorgi and Nino for your presentations. Thanks everybody for attending our call. Please stay tuned. I think we're gonna have interesting next tow-three years. Bye-bye.