Yeah. We go back to key highlights, strategic developments, what we had. Then Nino will talk about the macro and COVID update. Giorgi will talk about the Q4 results overview, NAV development and valuation, as well as. In the end, I will do the hard job to wrap up everything. Then we will have a Q&A session. Let's start the presentation. I guess our key highlights of the year 2021 is the sale of the 80% equity interest in the water utility company for $180 million.
As you remember, in November 2020, we updated our shareholders with our strategic priorities, and the key priority was to sell one of our strategic assets in order to validate our NAV. We did validate that it was 30% premium to the recent valuation of third-party. So we have the 100% of the water utility was valued as $225 million equity value, which was a 30% premium. Also, the good news is that we have brought very important investors in the country who know this business very well.
We remain in 20% with Aqualia, which is one of the largest water utility companies in Europe and in the world. We feel very comfortable in developing this business even further and creating more value for our 20% stake. By interacting with Aqualia and working together, we very much believe that more value will be created with strategic investor who has a vision and view how to bring this company forward. Here we have a strategy. The key highlights in USD terms, MOIC was 2.7x, and IRR was 20%+.
Lari, MOIC and ROIC was even greater, 3.6 and 27% IRR, which was absolutely critical for us to demonstrate to our shareholder that we create the value with our investments. We have done so with this. This is a kind of a second exit. One was the Healthcare Group, which we IPO'd in 2015. Back then, IRR was 102%. Unfortunately, it has shrunk the IRR to 20%+. We continue to deliver value to our shareholders by growing and developing businesses in Georgia. Just the timeline.
As you know, we had the water utility business under the renewable energy, and water utility was under the one umbrella, and there is a bond outstanding on holdco. We will be repaying this bond in August 2022, and we'll be separating water utility and renewable energy, so we will have 100% ownership of renewable energy going forward, and we will have 20% ownership in the water utility business. On next slide, our great achievements, which was in 2021. Disposal of water utility business. We also restarted our buyback program. We did a $10 million buyback, I think in 2021, and $5 million we had in 2022.
We also disposed of the commercial real estate, which is qualified under our subscale businesses, and we will continue to sell the subscale business. As you know, we want to focus on the large opportunities and not to spend management time and resources on the smaller ones, which are not scalable and cannot move the needle in our NAV. That's why we are selling these subscale businesses. In pharmacy business, we have struck a deal, we think a very good deal, to buy out our minorities 5.25 x EBITDA. I will remind you that the call was at 6.5 x EBITDA, and it was exercisable sizable in 2023. We will be buying out. We will start the buyout earlier.
Most importantly, our partners at pharmacy business will remain with us for next 6 years, which is very important. The management helped us to grow this business pretty rapidly, and they've done a great job being our partners. We like to be partners with our minorities in the pharmacy business who are also helping us to manage this business. It's instead of cutting off the relationship in 2023, we are actually extending for another 6 years, which is great news for us to have partnership with these minorities. We also did small acquisitions in education business. As you know, this is a kind of important business line for us.
That's where we think that the next growth is gonna be, and we think that we're gonna grow this business rapidly. We are betting on the next by 2025 to achieve GEL 50 million EBITDA through organic growth as well as acquisitions. Lastly, in 2021, we did the tap of the $65 million Eurobond, which is done mainly for liquidity purposes, to manage our liquidity. As you know, leverage has increased on our balance sheet, and, to be honest, we are not very big fans of leverage at this stage, and we want to decrease it significantly. Right now the gross leverage is at $365 million.
Since we have received the proceeds from the water utility sale, our net debt, Giorgi will correct me, won't allow me to lie, probably is around $150 million right now. Anyway, the bond tap which we have last year was purely for liquidity purposes. We do not want to increase our leverages, vice versa. We want to decrease it more rapidly, as we think that one of the reasons of declining the share price of Georgia Capital during the COVID times was due to excessive leverage with the whole holdco on its balance sheet. Next, I'll let Nino talk about the macro developments in Georgia and then Giorgi will take over.
Thank you.
Hello, everyone. Thank you, Irakli. Today I will give you brief macroeconomic outlook, and the macroeconomic update of country. First of all, let me start with COVID-19 statistics. On a global level, uncertainties remain high as this Omicron variant, like, there is no guarantee this Omicron variant end the pandemic. We had nicely passed the peak of Omicron wave, and governments have not imposed any significant restrictions during this Omicron wave as the vaccines were widely available to prevent ourselves and economic recovery was kind of priority. Now average daily cases is almost half compared to the peak of Omicron wave. The positive news is that the hospitalization and death rates are significantly lower compared to the previous peak in August or November.
In terms of vaccination, 47% of total adult population have at least one dose, and 43% are fully vaccinated. We have kind of Georgia was one of the top countries where total confirmed cases per million was kind of accelerated. In the next slide, we have continuation of the economic part of the story. Real GDP growth posted amazing double-digit recovery and hitting 14-year high. Preliminary growth is at 10.6%, which is 2x higher compared to IMF forecast average number for emerging markets and developing economies. Despite the base effects, GDP growth exceeding more than 3% compared to 2019 level.
Behind these nice numbers, we have both external and domestic drivers. From the domestic side, we had pent-up demand and expansionary fiscal policy, which played significant role, especially in the first half of 2021. Then later on, increased FX lending helped and contributed to recovery significantly. Like in whole year, bank loan book increased by more than 80% if you exclude exchange rates. From the external side, we have record high remittances, also record high export in an annual term exceeding GEL 4 billion. Also we have tourism revenues, which is recovering despite these restrictions and despite the several waves of COVID-19. In the next slide, we have exchange rate movements.
GEL is the top performer, one of the top performer in the region. It started appreciation in the second quarter and continued the trend and the stability throughout the year. Georgian GEL appreciated more than 10% compared to the beginning of 2021, and by more than 16% compared to 2021 low. It was quite kind of a stable trend, and resilience of Georgian GEL was driven by several factors, including external factors. We have some domestic factors which helped stability. From the external side, again, we should mention this record high FX inflows. Remittances exceeding year-over-year growth was 25%, while compared to 2019, remittances increased by 36%.
We had record high export also, and tourism revenue, which started to rebound. In the second half, tourism revenue was more than 50% of 2019 levels. In January, tourism revenue is close to 70% of 2019 level. This, the strong FX inflows were kind of significant driver of appreciation. Also from the external side, we should mention dollar index itself, which appreciated but not more than the level what was observed in 2019 and 2018 year. This appreciation was lower compared to previous tapering exercise. These factors. Yeah, this less like the dollar movement kind of will leave some room for emerging market currencies to remain resilient.
There was some domestic development which helped the currency to remain stable and increase confidence in GEL. First of all, we should mention tight monetary policy. National Bank of Georgia increased the rate 4x to 10.5%, despite the supply side nature of inflation. NBG hiked the rate in order to curb the inflation expectations. Also from the domestic side, we should mention widened interest rate differential between the GEL and foreign currency interest rates, both in GEL loans and GEL deposits, which are helping attract loans and GEL deposits, both positive for GEL stability. In all of these factors, these are important for GEL trend and increasing confidence in our currency.
In the next slide, we have inflation, which is another kind of hot topic on a global level, and is expected to remain hot topic in the coming year. Annual inflation increased to 13.9% in December and remained at elevated level in January. There was some utility subsidies, which kind of statistically affected the inflation from December, and this effect will remain in play until March 2022. After that, this effect should be eliminated from the inflation calculation. All of the components, kind of if we decompose inflation, all of these components are kind of contributing to the elevated inflation, mainly despite the fact that GEL has strengthened, so the imported inflation was key driver for this elevated prices.
As in the international markets, food prices increased and energy prices increased, and there was lots of challenges related to the supply side, bottlenecks and extended shipping costs. All of these were reflected in inflation. What is expected? National Bank of Georgia started to increase the rates from spring. It tightened monetary policy by similar to 250 basis points. Now it expects, unless additional shocks, it expects inflation to decline below 4% at the end of 2022. For the last slide, we have some charts for you from the fiscal policy. Debt level, which increased last year, is now projected, not projected.
This is kind of preliminary estimate that it will decline by almost 9 percentage points or 51.1%. In 2020, the pandemic led public debt and fiscal deficit to widen, which was kind of natural. It was not unexpected because government increased current expenditure in order to protect the most vulnerable. On the other hand, revenues were contracted due to the recession and due to the tax waivers and deferrals. Now, the fiscal policy and recovery, significant fiscal policy is like unwinding the costs, unwinding the price support measures. It's expected that the fiscal deficit will be drawn down within the fiscal bounds.
In the chart you can see that this public debt significantly declined this year and is expected to decline gradually. As for the fiscal deficit, it is expected to return to 3% ceiling in 2023. This was very quick update. We will appreciate your questions during our Q&A session. Now I will hand over to Giorgi for results overview. Giorgi. Thank you.
Thank you, Nino. Hello, everyone. I will be, over the next few slides, discussing the fourth quarter results, including the performance of the portfolio companies and our valuations and the changes in NAV during the fourth quarter. Starting with the aggregated revenue numbers. We finished the year very strong. In the fourth quarter, the aggregated revenue growth was more than 18% when we look at in the fourth quarter 2021 compared to fourth quarter 2020. That growth was even stronger when we compare it against 2019. The growth was almost 30%. On a full year basis, in 2021, the growth was almost 24% versus 2020 and about 34% versus 2019.
The vast majority of this growth both in the quarter and for the full year actually came in from the performance of our large portfolio companies. In terms of the EBITDA, the growth in the fourth quarter was 8% overall. However, the growth, when we look at the large portfolio companies, was at approximately 35%, where the EBITDA grew from 60% to 81%. The offset to this was some negative EBITDA that was recorded in the real estate that had an opposite impact.
When we look at the full year, the EBITDA growth was 35% for full 2021, and that growth was higher, about 38.5%, when compared to 2019. This also reflect the strong performance that our portfolio companies had in 2021, despite the challenges related to the pandemic. This growth in revenues and the EBITDA also translated in a very strong cash flow, operating cash flow performance. In the fourth quarter, our operating cash flow growth was in fact more than 38%, and it reached GEL 116 million in the fourth quarter. For the full year, we were largely flat over last year.
However, this was the reason that in the first two quarters, as we moved into the growth stage from the cash preservation stage, there was the investment that was made in the working capital, so that affected that part. However, you see in the fourth quarter, in the third quarter, we had a very strong operating cash flow growth. This brings that the aggregated cash that sits at the portfolio companies, so excluding all the cash that sits at the GCAP level, that portfolio company aggregated cash was GEL 377 million at the end of 2021, which is, you know, more than double of where that cash was at the end of 2019 before the pandemic started.
When we couple this, you know, with Georgia Capital, at the Georgia Capital level, we had cash of GEL 427 million, vast majority of which, 85%+, sits in foreign currency, which is predominantly U.S. dollars and some in British pounds. If we count in the settlement that happened on the sale of 80% in water utility subsequent to year-end in February, the liquid cash and our liquidity at the GCAP level it more than doubles to almost GEL 1 billion, in fact GEL 961 million. Later in the slides, we will see how that impacts our market value leverage within the Georgia Capital level.
As we now dive into the individual portfolio companies, starting with the healthcare, which had a very strong year and very strong fourth quarter, you see that you will see on this slide that the bed occupancy in the healthcare was now approached almost 70% in the fourth quarter, which is a very strong performance for this business. For full 2021, bed occupancy was more than 65%. This translated into almost 31% growth in the revenues in the fourth quarter. For the full year, the growth in the revenues was 43%. On the EBITDA-wise, the growth in the fourth quarter was almost 8%, but the growth for the full year in 2021 was 54%.
When we compare that to 2019 even, that growth was 28%. This business had a very strong performance during the year and including the fourth quarter. In the retail pharmacy business, another business where we also had a very strong performance. Now the number of pharmacies, which we opened about 36 pharmacies during 2021, the overall number has now reached almost 350 pharmacies. That has resulted, combined with the, you know, same store revenue growth in the fourth quarter, was more than 10%, and then it was more than 10% for the full year as well.
That resulted in the revenue growth of 7.6% in the fourth quarter, and the EBITDA growth was even stronger at 10.5%. For the full year, the revenue growth was 15% versus 2020, and 27% versus 2019. The EBITDA growth for the full year was more than 8% versus 2020, and almost 17% versus 2019. Next we have the water utility business, where we sold the 80% stake as it was discussed earlier.
This business also had a very strong performance that was supported by the energy revenues, where we saw that the energy revenues in the fourth quarter of 2020 that was only GEL 1 million increased by 6x in the fourth quarter 2021 was GEL 6 million. This coupled with the increase in the water utility sales to the corporates, which you know coupled with the increase in the tariff resulted in the overall revenue growth of 62% in the fourth quarter. For the full year, the growth was 56%. That also meant that the EBITDA in the fourth quarter increased from GEL 12 million to GEL 31 million, so almost tripled in the fourth quarter. For the full year, EBITDA more than doubled.
It went from GEL 63 million in 2020 to GEL 128 million in 2021. That GEL 128 million is also actually 35% higher than the pre-pandemic EBITDA of GEL 95 million. Again, another business, water utility business also had a very strong performance in 2021. Then next we have the insurance business, which combines both P&C and the medical insurance businesses. Within the insurance businesses, we also had a strong year. The gross premiums written increased double digits in the fourth quarter when we compare it versus 2020 and 2019. Similar growth was observed for the full year as well. In terms of the profitability, P&C business had a strong quarter.
However, on the medical side, because of the increase in the loss ratio related to the claims that resulted in the lower net income. In terms of the net income, we had about 6% decrease on a full-year basis and about 3% decrease when we compare to 2019. This is, you know, all businesses. If we go to the next section, we will look at the NAV development. Our fourth quarter NAV increased by 5.5%. That means that our NAV per share at the end of December was in excess of GEL 63 million, which is a record high NAV per share ever since our demerger from the BGEO Group.
The growth for the full year in lari terms was 31%. When we look at the controllable NAV, which is the NAV per share growth, but excluding the listed investment Bank of Georgia, the growth was also very strong, 5% growth in the fourth quarter and then 30% growth for the full year. We also look at as one of the metrics of our performance, the overall Georgia Capital net income based on our fair value accounting, which was around GEL 681 million for the full year 2021, when taking into account all the valuation gains.
When we look at that number, and when we look at current market cap where we're trading, that means that on an LTM basis, Georgia Capital is trading at around 1.8x PE multiple, when looking at the fair value net income. We wanted to share this observation with you as well. On the next slide, we now show given the discount where we are trading and where we were trading, we launched $10 million buyback, as you know, in August. We added another $5 million in mid-January. Right now we have a $15 million buyback program running.
Of that $15 million, we spent about $4 million in the fourth quarter 2021, and we bought back around 470,000 shares, all of which were canceled during the fourth quarter. For the full year 2021, that means that we bought shares worth $7 million, and that was around 823,000. To date, since the buyback program began, we have bought 1.3 million shares, slightly more than that, which is about 3% of our outstanding shares when we started the buyback program in mid-August. On the next slides, we will talk about, you know, how that impacted the NAV per share for the full year.
Given that we were buying back at a significant discount, this was accretive for the shareholders. The value, for example, that was created in the fourth quarter by these buybacks was around GEL 16 million when we look at the NAV per share level. Next slide. Here, this is the breakdown of our the 5.5% growth that I mentioned earlier, how that breaks down into the various contributors. The growth came from Bank of Georgia where the share price increased quite significantly during the fourth quarter. That added about 2% to our NAV per share. We have a large portfolio companies where the growth came from in a water utility uplift, given the sale.
A very strong performance of the retail pharmacy and the gain that we recorded on the buyout, and then also the other portfolio companies. All this growth was about 6.1% impact on the NAV per share, and 99% of this actually came from the operating performance. Multiple change related performance was or the impact was very minimal on the 6.1% growth. We have 1.1% reduction to NAV per share from the investment stage portfolio companies, which relates to the write down of the flooded hydro power plant. We wrote that down, and that was around GEL 35 million reduction to our NAV or 1.1% to NAV per share.
In other portfolio companies, this was, you know, largely the performance within the real estate, where the remeasurement of the remaining construction costs impacted the valuation. That was the decrease of 0.8%. The buybacks that we did in the fourth quarter, it added about 0.6% to our NAV per share growth. The rest operating expenses relates to the OpEx that's spent at the Georgia Capital holding company level, and we did liquidity management and FX and other. This 1% reduction relates to various net interest income, expense accrual, and also the fees related to the water utility business sale. At the end of the day, we finished the fourth quarter with 5.5% growth in lari terms and 6.6% growth in pound terms.
On the next slide, we have a similar breakdown, but this is for the full year. I would highlight that the full year growth in Lari terms was 31%, but in pound terms it was almost 40%. In pound terms, we grew by 40%. The contributors were along with Bank of Georgia contributing, you know, more than 7% to our NAV per share growth and then private portfolio companies contributed 26%. I'd also highlight that the buybacks for the full year contributed almost 1% growth to NAV per share. On the next slide, we will now dive into the individual portfolio company valuations where we have the material movements. In the fourth quarter, the most material uplift in valuations came from retail pharmacy business.
That was GEL 93 million, followed by the uplift in water utility business when we marked this business to the sale price in the fourth quarter. That was also followed by Bank of Georgia, GEL 40 million. Our overall, our portfolio increased to GEL 3.6 billion, which is about $1.2 billion. For the full year, our portfolio grew, you know, very strongly, more than 24%, during the year. Where the most growth actually came from the water utility business. It was GEL 226 million, which was, you know, which translates into about 48% uplift to where this business was marked at the end of 2020.
The next highest contributor was healthcare services business, which as you saw earlier, had a very strong year, and it had GEL 160 million value creation. Retail pharmacy business was another one with GEL 158 million value creation, which was also, which also had a very strong performance. Then the next one was, you know, Bank of Georgia with GEL 150 million. So when we look at our large portfolio companies in Bank of Georgia, overall, their share in the portfolio value growth was 98% in 2021. Next slide, we have, you know, overall overview of where these different businesses are marked in terms of the valuations at year-end, because this was year-end valuations.
We had the independent valuation company, this, the same firm, Duff & Phelps, perform the valuation for, you know, all our large portfolio companies. You know, retail pharmacy, healthcare business, insurance, and the water utility, and Bank of Georgia, as you know, is listed, and we use the listed price. That brings that 85% of our portfolio was externally valued. The remaining 15% was internally valued. As a result of this, we have that the multiples have not changed much. We will look at on the individual slides, but on the healthcare services, we have 10.3x EV/EBITDA multiple. Then the second-largest private portfolio business that we have right now is retail pharmacy.
That's marked at 9.3x, and the water utility at 8.3x, which is, you know, our exit multiple in that business given the sale of 80%. Next we have the breakdown of the healthcare services business valuation. Given the strong results that we had in this business, we have a value creation for the full year that was very strong. The value for the full year in this business increased by GEL 170 million. For the quarter, the growth was almost GEL 15 million. Even though the multiple reduction was from 10.5x to 10.3x. Next we have the retail pharmacy business. Here, the value creation pillars came from two sources.
One was the growth in the LTM EBITDA, and then the very strong cash flow generation resulted in the equity value growth by GEL 52 million. We also had a gain of approximately GEL 40 million on the buyout of the minority shareholders because we are valuing this business at 6x. We were valuing the call option at 6x. Now that we have signed the agreement at 5.25x EV/EBITDA multiple, we remeasured, and that remeasurement resulted in GEL 40 million gain. Overall, for this business, we had about GEL 93 million value creation.
Next, we have a water business where this has been, you know, valued at the exit price, which is for the 100%, $225 million, of which we sold 80% for $180 million. They had a very strong year, and this translates into about, you know, 8.9x EV/EBITDA multiple. I will not go into the technical details of the valuation because we marked this at the exit price. In the insurance business, we present here the P&C Insurance. They had a strong year overall. However, in the fourth quarter, there was a slight decrease in the operating performance in the net income number. That was about GEL 400,000 . That impacted the valuation.
We have about GEL 4 million decrease to the equity value, and there has been no change to the multiple. Next we have our leverage and the liquidity profile. You will see on this slide that for our targeted 30% market value leverage, which is the net debt divided by, you know, portfolio value. We have come down to 24.2%, based on, you know, the year-end valuations. If we adjust that for the completion of the 80% sale in water utility business, which will be completed as you saw earlier in August-September timeline, we would be coming down even inside 20% at 19.2%.
Which will be you know very strong growth given that we were at you know 29% at the beginning of 2021. As a result of this strong performance, you may have seen about two weeks ago S&P upgraded our credit rating from B to B+, stable, which is now public. We also look at our liquidity. Our liquidity was $138 million when we look at as of year-end. Of $138 million, there was $50 million that was loans issued to our portfolio companies. The remaining about $88 million was held in you know cash at bank and the highly liquid marketable securities.
When we adjust this for the cash receipt of $880 million that we received at the beginning of February, and also taking into account that $95.4 million that we have to on-lend to renewable energy in July-August timeframe to redeem the GGU bonds, our overall liquidity more than doubles to $310 million, where about $145 million will be loans issued to portfolio companies, and then the rest will be, you know, cash and the highly liquid marketable securities. Last slide from my perspective is the dividend income. In 2021, our overall dividend income was more than GEL 74 million, and we collected dividends from Bank of Georgia, GHG, our P&C insurance business, and the renewable energy.
I would highlight that the GEL 74 million exceeds the dividends, the cash dividends that we collected in 2019 year. We are now ahead of 2019 by around GEL 1.5 million. Our outlook for 2022 is that we expect the dividend inflows in 2022 to be between GEL 90 million-GEL 100 million. This takes into account both private and then public portfolio company, which is Bank of Georgia. We only received interim dividends last year. This year we expect both interim and then the full year dividends to be received. This concludes my section, and I will hand it over to Irakli for the wrap-up section.
Thank you, Giorgi. I think you are doing very well, so you can do the wrap-up as well.
No, I leave it for you, Irakli.
To wrap up, we had a successful sale of the water utility business, and we are very comfortable with our partners there to create further value together. We also did sell the commercial real estate business at a considerably high multiple of 2.7 MOIC. Similar MOIC we had in the water utility business. Both of them were sold at a 30%+ NAV premium. I don't know what else can validate our NAV. I know our NAV growth was very strong at 30%+.
This is basically our profit in a way, the growth between the NAVs. We had one question, you know, how Giorgi calculates 1.85x P that we are trading. The way we look at Georgia Capital, that the value which is created per year is our profit basically. If you apply that profit which we generated last year, that will works out to be 1.85 x our earnings. So that's where basically we're trading. Okay, maybe last year it was extraordinarily high because of the water utility sale. But GCAP probably trades at a recurring value creation or recurring net profit.
What standalone Georgia Capital is doing is around 2x-2.5x max. That's where we are anyway. We had a very robust operating performance in our portfolio companies, very year-over-year growth of EBITDA, and the revenue was 24% and 35% respectively. The operating companies continue to deliver excellent results. Dividend inflows was also very strong at nearly GEL 75 million. As Giorgi mentioned, we are ahead of the 2019 numbers. The market value leverage has decreased considerably, and we are around below 20% now. Going forward, we want to decrease it even further. We will talk about it at our Investor Day, which we expect to be holding mid-April most likely.
We will announce the exact date first. In terms of outlook, we had a very strong GDP growth last year. This year we expect 5%-7% GDP growth. We expect robust dividend inflow. We think that our portfolio companies will continue to deliver the value and grow in terms of the EBITDA and high growth in terms of EBITDA and revenue. Like I said, we most likely after the board review are going to have a number of rounds we're gonna hold, and first one will be actually next week in London. Basically, we will continue to review, and we expect around in April to come up with the new strategy priorities.
I should mention the expectation for the large buybacks is high, and I must say that I don't have that high expectation because we'll be more focusing on deleveraging and making the balance sheet of Georgia Capital even more stronger than on buybacks. Yes, it's a good opportunity to buy back at a lower price, at a big discount now. We will have some buyback obviously. But I would not bet. If I would be you, I would not betting on the large buyback. I would rather be focusing on the deleveraging, which would make our balance sheet even stronger. Anyway, I think I have answered some of the questions we have been receiving, but I think it will be good to go through the questions.
We are happy also if you. We are receiving some questions by the chat here. But in case you would like to just to say a couple of words, we'll be very happy to hear your voice. Please raise your hand and ask the question.
Here, Irakli, just a technical reminder, as Irakli mentioned, if you have questions, please press the raise hand button or type them in the Q&A panel. We have a question from Al.
Hey, this is Al Bridge. Irakli, congratulations on wonderful results. I mean, the sale is super-duper. I just wanna explore with you if I may. You talked about the capital you get from the sale. Fantastic. You wanna pay down the debt, et cetera. Can you talk about what you think about debt levels, buybacks?
The strategy in terms of capital for the coming years.
Basically, I mean, I think that the big picture is what we have here, that GCAP had a quite large debt at the holdco level and our operating companies also they were levered at nearly 4x EBITDA. I think that we need to bring this debt level down. We have brought the operating company level debt down pretty significantly. The next 2 years probably will go down even at 2x EBITDA, the debt will go down. I think that a more prudent way of debt would be probably 3x EBITDA of our portfolio companies and the GCAP debt all together.
That's where kind of I think that the company will be even greater sustainable and we have a very strong balance sheet. In terms of the buybacks, I think that it's we should entertain and we should balance these two deleveraging and the buyback. But I think for us, what we saw is, especially in pandemic, when pandemic hit and GCAP share price slashed pretty dramatically near the 70%, the leverage at holdco level was the key driver. We don't want that to happen again. We want the GCAP balance sheet to be strong and sustainable over the years.
Fantastic. Thank you. That's super. Thanks, all.
Thank you. We have the next question from Brett. Brett, please.
Hi. Thank you. And congrats on the sale of the water utility business. I have just a couple of questions. One is on your net debt level. I'm just. I didn't understand how you get to the number that you're at. At year-end, you were at a net debt of GEL 710 million, give or take. Then you sell the water utility for GEL 697 million, and you get 80% of that. That's, like, GEL 550 million. The net debt there is more like GEL 150 million. Right? If I subtract those two.
That would be $50 million, yes.
Is that right?
Yes, that's right.
Okay. I thought I'd heard Irakli say it was $150 million, not Lari.
Yeah. Sorry, my mistake. My bad.
Okay. Good. That was the first thing. Then, in terms of your debt at the holdco, it comes due about, I guess, 2 years from now. I know you're gonna sort of re-evaluate this shortly, but is there a way to sort of push out the term of that debt?
Actually we want to reduce it and not push out, basically. I mean, we want to reduce significantly. I think that we feel uncomfortable with this level of debt, especially, you know, the flow of the cash to the GCAP and subsequently from GCAP to our shareholders is constrained by this cash, so by this debt. Right now we are paying around $22 million of interest on that debt. Obviously, we need to have some debt to have a good balanced capital structure. We are not denying the debt, but I think it's kind of excessive. Instead of pushing out, we would be reducing and pushing out probably, yeah.
Just the last question is just on the buybacks again. I know you've been talking about it, but like, you have so much liquidity, and your leverage at $50 million is, you know, a pretty small fraction of the value. Why don't you just get a little bit more aggressive with buying back shares given how sort of huge your discount is? It just seems it doesn't make sense to me why you're not trying to buy back a little bit more. Like, 1% just feels like, you know, not even worth talking about almost.
No. Basically, I think that we will come out with our decision. I don't want to rush through. I just, for us, top of mind is the leverage, taking care of the leverage. The second one is the discount. Actually we are letting you to take advantage of that. How else could we demonstrate what is our NAV than selling at 30% premium one of our largest assets? How else can we demonstrate? We sold the small assets at 35% to NAV. You know, what else shall we do so you go and buy this, you know? You take advantage of that. You know, you are telling us, and we are saying that for the company, it's good to delever. If you want to make money, go and buy.
Yeah, that's fine. You know, as the capital allocator of the company, you know, your job is to-
Invest the cash flows in sort of the highest return properties in combination with having a prudent leverage. You now have a prudent leverage, and your job is really to
I don't think you understand what prudent leverage is.
To invest the cash flow most profitably.
I mean, no, we will talk about that in greater detail when we come up with a strategy. It's not a static, the cash and the leverage. It has changed with your plans, right? How do you know, how do we know what is the prudent leverage? If you don't know what are the plans. Anyway, what we are saying that we will be balancing it, but it will not be aggressive as you would want to hear, because we want to be more aggressive on deleveraging. That's what we think as capital allocators, that is prudent for the company. You may think otherwise, but we think that way.
All right. That's all I have.
Thanks, Brett.
Thanks. We have another question from Gokul.
Hi. Am I audible?
Yes.
One of the things which I wanted to know is, when you say you want to de-lever, what's the ideal leverage that you would like to run the business with? Or do you like to run it with no debt at all?
With that, we may turn this call to the strategic discussion and the investor call, but basically we want to decrease significantly. We will come up with that when it comes in April.
Okay. As investors, I think reducing the leverage is something.
Basically, I wanted to flag about this large buybacks because we were getting these inquiries that we should do a very large buybacks. I don't want to have a market to be in a very wrong position, very wrong situation than we are thinking.
Right.
We want our thinking and market thinking to align. That's why we want to flag it that-
Got it.
It won't be large. That's all we can do. We can flag at this stage.
Okay. That's understandable. I think for us, I think it's okay that you use the cash to deleverage that anyway adds back to the equity value. What I would be concerned is you using that cash to again go and do other investments when your stock is so cheap. That is the only one-
Yeah. No, I agree with that. We cannot do the investments with this.
Yeah.
If you look at our investment philosophy, it's very simple. We want to buy things which is cheaper than our stock.
Right.
Now, right now, our stock is so cheap we cannot really buy much.
Yeah.
Our investment activity is very much halted. We are there with you. Absolutely.
Yeah. Yeah. Basically, when I look at it looks like, adding the bank stake and whatever the water utilities stake, the private portfolio is essentially just valued at zero or is free at this point.
Yeah. It is, yeah.
Right? There's no point in you going and doing further. That's the only thing. Okay, deleveraging is fine because that reduces the risk. We also benefit. We can buy from our side. As you said, so all that is fine. Yeah.
Yeah. I agree on the investments fully.
Yeah. Thank you.
Okay. I hear you. Thanks.
Thank you. We have several questions in the Q&A. The first one is from Brendan. Given the large discount of the share price to NAV, what are your milestones for assessing the success or otherwise of your actions to reduce the discount, and what other actions will you consider deploying?
I think we have addressed that one with this discussion. Let's go further.
Yes, I think we also addressed the question on the 1.8x PE multiple. I'm gonna skip that. The next question is from Giorgi Togonidze. He's asking, I was wondering why did you guys write down HPP now and not earlier, given that the funding happened in 2019?
Yeah, good point. Basically, we wanted to rebuild this hydro. That was our plan A. We have done a research, a lot of research, what we would do with this hydro. After the studies, we've done a number of studies. We have decided not to rebuild this hydro. That's why we written down, because if we would have decided to build it, we would not have written down. That is the kind of the result of the decision of not to pursue of the rebuilding or renovating the hydro. That's how it work. That write down was linked to a decision of not rebuilding.
Thank you. The next question is how much LTV room do we have in order to keep B+ rating?
The current level is sufficient, as long as we stay below 30% for a prolonged period of time. Our understanding is that's how S&P looks at the rating, so it should be sufficient as long as we are, you know, around 20% for us to keep the B+ rating.
Thanks. The next question is from Krish. Congratulations on an outstanding year, including the transformative deal. I'm interested to hear about where you see the next phase of growth being generated. You mentioned education being key. How much further do medical services and retail pharmacy have to run?
I think that's a question also for our strategy session in April, what we're gonna hold. Basically, education is one of our big growth we think we have. In healthcare, we have a lot of pockets to grow further, and you know, we may have some suggestions going forward, what kind of growth opportunities we have. What I can say is that right now we are looking at a lot of different growth opportunities. I think that we have plenty of those. We will be more, I think it will be more prudent and comprehensive to talk about those at the Investor Day.
Thank you. The next question is from David Pryce. He has two questions. Have you made any progress on the disposal of your subscale asset portfolio? Are you still committed to the timeline announced on your Investor Day? The next question is, could you give some additional details on the write-down in the renewables business which we already have addressed?
Well, yeah. Basically, we are progressing on subscale businesses. We have progressed on the sale of the hotels which we want to sell. Obviously, we are not selling as fast as we want, but we would rather wait for the tourists to resume. We think we're gonna get a better value out of our hotel business once the tourists resumes even stronger. The rest we are on time, on schedule for selling our subscale businesses.
In terms of the beverages, we are actually scaling up very nicely, and we think that it will be very attractive in a couple of years' time venture for the strategists who are in beverages business to buy that from us. We are happy with the progress we are making. As we said, in commercial real estate, we sold it at nearly 40% premium to NAV with 2.7x MOIC and 20%+ IRR on the commercial real estate of $45 million worth. So that was in our subscale businesses.
Thank you. The next question is, what is your outlook about the recent regulations in the pharma sector and the impact on your portfolio company?
Nick, do you wanna talk about that?
Yes. Hi. In terms of the pharma regulations, there was nothing significant by the way. Only thing what has happened, this competition agency has reviewed the pharma sector, which we've been kind of cooperating with. What they have reviewed, the report was very positive. The major part of the report is that the local market is not making excessive margins, which was always kind of a very populist approach. The major kind of antitrust agency puts this in the report that the margins are average 18%-26% gross margin, which is normal, which is very good for us. What the government has done in terms of regulation was kind of a pre-agreed with the sector. They added Turkey as a country of the parallel import regime.
This law on parallel imports was introduced in Georgia back in 2009, which has helped a lot to bring some medicines from the subsidized market or semi-subsidized market, which are authorized, and the medicines which are either approved by EMA or FDA, or Japanese or Israeli drug agencies. They added to this list Turkey. In Turkey, the medicines are way cheaper than in Georgia because Turkey is a large purchaser. Plus they are buying in lira for many years. They fixed the prices in local currency and after devalue of the lira, so the prices are pretty attractive. We were not able to import from Turkey without this amendment in law. This amendment have been made now, and we will be.
By the way, we already done a first import, everybody is happy, so population, government, and us. That was the only change. It will not have much of the impact on us. We don't anticipate any significant impact out of there. That's pretty much it. Another thing what we are working together with the Ministry of Health is reintroduction of the electronic prescriptions, which GHG companies, our clinics are doing from 2016. There will be no change in our practice here as well. That's it.
Thanks, Nick. I think we have a couple of additional questions. Can you elaborate on the different loans issued to subsidiaries? I believe GEL 154 million in total. What are the repayment timelines? How is leverage going to change at subsidiaries level? Giorgi, if you want me to share the slide-
Yeah, sure.
You can go ahead.
This is predominantly with three of our portfolio companies. That would be real estate, housing, and the hospitality businesses. Plus, that will be auto services business and also the beverage businesses. That's where this is broken out. We generally expect that the repayment of these loans falls before our Eurobond maturity, $365 million Eurobond maturity that matures in March 2024.
Thank you. There is another question from Gokul. Please go ahead, Gokul.
I just wanted to check for the sale of the water utility business, do we incur any capital gains tax? Or, even if we use the capital for deleveraging, there is no capital gains tax?
There is no capital gains tax in Georgia at all Gokul, so we will be keeping all the proceeds, and there will be no taxes paid in relation to the.
Okay. Because I thought that that rule was basically that, there's no capital gains tax if you reinvest the assets in Georgia or something like that, right? Does de-leveraging and share buybacks all constitute under the broad scheme?
Yeah, your understanding is correct. What I meant is, if you upstream that cash to, let's say-
Yeah
U.K. entity, 'cause we saw this from the
Right
... from the Georgia entity. If you upstream this in excess of, you know, what your tax reserves are there, then it could be taxed. But we have sufficient reserves that even if we upstream all cash, we wouldn't be taxed anyway. But at the moment, we're keeping that cash at the JSC level right now, right? So what happens next I think will be announced at the strategy day. But with that, we won't be incurring any capital gains tax or any tax at the moment.
Okay. Is there a lot of inorganic opportunities within the existing platforms, for example, on the hospitals business and the education business? Leave aside the greenfield developments, but acquisition opportunities.
I think probably Nick's better placed for the hospitals. In education space, yes, and we bought one school, as you know, in August. There are opportunities that we look at. I don't know if, Irakli, you want to add to that point. There are opportunities that we look at in the education space.
Okay.
We see a lot of opportunities. In a way, our share price discount is a little prohibitive for us to be more active and aggressive.
Yeah
With regard to that. We did buy the recent acquisition we did at five times EBITDA, a little bit less than 5x EBITDA, which we are looking at the education business trading at 12x-14 x. That was for us a higher bigger discount than the GCAP discount. That's why we allowed ourselves to invest. However, we did invest, we invest a small amount of money, and we want to. In education business, we don't think that we're gonna be investing much. It will be a small investment here and there into the acquisitions and the expansions. We like the education business because it's not a capital heavy. It is a it is.
Its EBITDA margin is quite attractive. It goes to 35%-45%, depending on the segment we are targeting. If you compare the healthcare business, which we know pretty well, and we have done a lot of growth and acquisitions and organic and MSO M&A, we see a lot of CapEx being for not only development of the buildings, but the equipment, MRIs, CTs, et cetera. You don't have that in the education business. The EBITDA margin in healthcare you have around 25% and heavy CapEx. Education is very CapEx light and higher margin.
That's kind of, you know, where we are coming from, and that's why we like this, the education business a lot, and that's why we are focusing on it, on the growth of this business.
Right. Irakli, I understand the fact that, the share price stops you from doing this fresh investment. Can there be a way around instead of, diluting at the holdco level, can you raise equity at these company levels to fund some of these acquisitions? Or as you've said before, start a third-party asset management business and then use that capital to do these investment activities?
We do not want to do on capital light ones, to be honest. On capital heavy, why not?
Okay.
You know, capital, a capital light one, basically, we are still managing to buy at a healthy discount to the market comps. This ticket size is not that large.
Mm-hmm.
If you look at the capital heavy ones, you know, investing like $30 million-$40 million in one go, it's
Mm-hmm
... it's prohibitive basically for us, with this share price discount. Therefore, you know, third par-
Yeah, yeah, I understand that. I was just trying.
Third party makes more sense there.
Is there any progress on that? Would you be raising cap, third-party capital, as a separate asset management?
Let us update that one on the Investor Day as well.
Sure
You know, we want to give you a kind of more comprehensive picture on that.
Sure, sure. Makes sense. Thank you.
Okay, thanks.
Thank you. There's another question with this on the subsidiaries that as well on slide. It says on slide that GEL 420 million relates to repayment refunding this year. When will it be clear that this has been successfully refinanced, repaid? So that is the question from [Clarence Ngari].
Giorgi, I think that's.
Yeah, sure. That GEL 420 million, about GEL 200 million of that relates to the large portfolio businesses. That's majority of that goes to the healthcare business, where we have a maturity of the local bonds of around GEL 60 million that matures in mid summer. We expect to roll those forward. There is also a maturity of one IFI loan that will also be repaid. The rest, another GEL 200 million, is split by about $35 million worth of bonds that mature at the housing business in October 2022. Then the rest relates to the loans that the hospitality business has borrowed from the local banks.
We expect that these loans will either be repaid during the year or they will be refinanced and prolonged. We don't expect any allocation from Georgia Capital to pay down these loans.
Plus our lead, so big chunk of this IFI, I mean, fully this IFI loan we have not utilized. We took this as a funding during the COVID time, so it's sitting on our balance sheets right now, so it is in a net-net debt, so we don't need to raise anything for refunding of it. There is a small bond outstanding on the GHG levels, which we'll be rolling over.
Thank you. I think we don't have any open questions for now.
Thank you. Thank you, everybody. Thanks for joining the call. It was very interesting and we are really looking forward to talking to you again in April. We will be sending hopefully soon the exact date for our Investor Day. We are very much looking forward. Thanks again. Thanks Giorgi, Nick, Shako for your participation. Nino, thank you for great presentations. I guess we'll end here and stay tuned .