This article was originally published on Fool.com
WASHINGTON, DC When it comes to travel, international flights that get in late are the worst. First, it takes forever to get out of the airport because there are never enough immigration officers working. Then theres the fact that mass transit has probably stopped working for the night and theres a dearth of reputable cabs. Finally, theres just the general disorientation of being in a place you dont know when its very, very dark.
For example, a few years ago Bill Mann and I landed in Ulan Bator, Mongolia, after midnight. After getting our passports stamped by the one immigration officer present and negotiating a ride into town with an unmarked cab, we were on our way out of the airport. It was pitch black. We reached an intersection. There were no signs and no other cars. Nothing but darkness to the left and the right. The driver turned left. Bill glanced at me and said, This will either be a short ride into town or were on our way to die in the desert.
In the end, the worst thing that happened was that we discovered that our driver really liked techno.
Still, I wasnt that excited recently about landing by myself in Tbilisi at 3 a.m. As it turned out, though, 3 a.m. is prime time at Tbilisi International.
Georgia: A hidden gem
Because of its geographical place in the world (approximately 1,600 miles east of Rome) and the limited number of direct flights, if youre leaving Tbilisi, Georgia, to catch a connection to the U.S. or Asia, you need to be in the air by 4 a.m. to fit in to the rest of the global flight timetable. And since there arent many airlines that wish to keep planes on the ground in Tbilisi, those planes are all coming in at 3 a.m. to make a quick turnaround. With travel to Georgia growing more than 15% annually over the past five years, that means I walked off the plane into a party. It was all hands on deck at immigration, the cab line wrapped around the airport, and the free samples were flowing at the duty-free shop.
See, the world is beginning to discover that Georgia is nice place for business or pleasure. On the pleasure side, its safe, the weathers nice, and the food and wine are delicious. On the business side, following reforms spearheaded by former President Mikheil Saakashvili, Georgia now ranks eighth on the World Banks Ease of Doing Business Index. Thats better than the UK (10), Australia (11), and Germany (21) and absolutely wallops regional peers such as Turkey (69), Azerbaijan (70), and Russia (92). This comparative regional advantage on the commerce front has jump-started Georgias economy and has local entrepreneurs believing that Georgia can emerge as a regional trade hub, health-care and retirement destination, electricity exporter, expanded oil pipeline purveyor, and tourist destination.
Having done some research, and having now been on the ground in Tbilisi, I can say that that vision is credible. Its for those reasons that its worth considering the Bank of Georgia(LSE: BGEO), the largest and best-run financial institution in the country.
On the ground learning
Of course, it doesnt take a trip to Tbilisi to determine that the Bank of Georgia is well run. Its financial statements show plain as day that its a good underwriter that keeps operating costs down and delivers a healthy return on equity.
Whats not so obvious from afar is why the bank operates a health-care arm thats acquiring hospitals or develops real estate. This puzzle, however, becomes easier to piece together once one goes and visits.
Get to know Georgia
Georgia is not a large country. Home to 4.5 million people, its less than half the size of our state of Georgia. Further, its been only a little more than 10 years since the Rose Revolution toppled a corrupt, Soviet-style government. Given those facts, as you might guess, the market is not overflowing with fast-growing, well-run local companies.
Yet thats just what the Bank of Georgia is growing both as the market expands and by taking market share. Its growth seems to have made the Bank of Georgia a magnet for top talent, with CEO Irakli Gilauri telling me that the biggest challenge he has today is best deploying all of the good people who have come to work for him. This challenge most recently manifested itself when Gilauri made the former bank CFO the head of the health-care unit, making the health-care CFO the bank CFO, rehiring a former CFO whod gone to work for the Saakashvili government to take over risk (this person has a Ph.D. in physics from Johns Hopkins and experience at Bear Stearns, to give you an idea of the quality of people were talking about here), putting the former head of risk atop the growing corporate banking segment, and placing the former head of corporate banking in charge of the banks nascent investment banking business which is called Galt & Taggart, if that gives you a sense of the degree to which this former Soviet republic has embraced free markets.
Got all that? The point is that this is why the Bank of Georgia has its finger in so many businesses. It believes it has a glut of talent that gives it a competitive advantage across business lines in the small and relatively immature Georgian economy.
Investors can trust that thats true, but they should remember to verify it down the line. The first step in that verification process will be to continue to monitor the progress of health-care subsidiary Aldagi, which is rumored to have its own IPO coming in the near future with IPOs for the other non-core business units perhaps following along when the time is right. Should these IPOs succeed, it will demonstrate that this talent edge is real and should recycle additional capital back into the bank.
But investors also dont need these non-core businesses to succeed for an investment to pay off. The thesis is based on owning a good bank in a good market, and thats exactly what Bank of Georgia is.
That’s the kind of business we like at the Motley Fool, andwe focus on investing in businesses for years rather than months. It’s over that kind of time horizon that we can make sensible judgments on how a business is likely to perform, and whether the price is right.
If you’d like to see what I’m talking about, thisinvestment dossierfrom our top Fools may be of interest to you.
It’s called ‘The Fool’s Five Shares To Retire On‘, and it’s currently free to view. It contains the five shares which we believe could be perfect for building a long-term portfolio. If you’re looking for investment ideas, which you can act on right away, this would be an ideal place to start.
Click hereto get instant access without any obligations whatsoever!
Get FREE Issues of The Motley Fool Collective
Get straightforward advice on whats really happening with the stock markets, direct to your inbox. Help yourself with our FREE email newsletter designed to help you protect and grow your portfolio wealth.
By providing your email address, you consent to receiving further information on our goods and services and those of our business partners. To opt-out of receiving this information click here. All information provided is governed by our Privacy Statement.
Tim Hanson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
