Bloomberg News

Georgian Billionaire to Quit Business in Bid for Premiership

July 20, 2012

Georgian Billionaire Bidzina Ivanishvili

Georgian billionaire Bidzina Ivanishvili is divesting properties to mount a challenge for the country’s premiership and burnish his credentials before the Georgian public. Photographer: Daro Sulakauri/Bloomberg

Georgian billionaire Bidzina Ivanishvili said he may quit business after raising more than $1 billion selling Russian assets as he prepares to challenge President Mikheil Saakashvili’s alliance in October elections.

“I won’t return to business in Russia and may never return to business altogether,” Ivanishvili said in an interview yesterday at his party’s headquarters in the capital, Tbilisi. The proceeds from asset sales will be invested elsewhere, he said, without elaborating.

Ivanishvili, 56, said he agreed with Forbes magazine’s estimate of his wealth at $6.4 billion, equivalent to almost half of Georgia’s $14.4 billion economy. In May, he sold his Russian property assets and stakes in Moscow-based Rossiyskiy Kredit Bank and the Doctor Stoletov pharmacy chain. Another deal to relinquish his agricultural businesses in Russia will be completed within days, he said, adding that he valued his holdings in the country at no less than $2.5 billion before their sale.

Behind in the polls, Ivanishvili is divesting properties to mount a challenge to become the premier and to burnish his credentials before the Georgian public. In April, he created an opposition political party called Georgian Dream -- Democratic Georgia, pledging to remain in politics for two years before leaving to become an “active member of Georgian society.”

Georgian Investments

Ivanishvili said he no longer controls his main investments in Georgia after they were seized by the government for refusing to pay a multi-million dollar fine for violating party funding rules. His holdings included Cartu Bank, the nation’s sixth- largest lender by assets, and a stake in a local lender controlled by soccer star Kakha Kaladze.

In the post-Soviet years, Ivanishvili divided his time between homes in Moscow, Paris and Georgia before moving in 2002 to live full-time in his native village, Chorvila, about 130 kilometers (80 miles) from Tbilisi.

The billionaire has held a Georgian passport since 2004 until the government revoked it last year and also picked up French citizenship in 2010. He renounced his Russian citizenship and remains a French citizen.

In May, lawmakers approved a law that opened the opportunity for the billionaire to run in parliamentary elections this year even without Georgian citizenship. He repeatedly condemned the amendment, saying it was wrong to tailor legislation to a single individual and refused to petition Saakashvili directly to grant him dual citizenship.

Russian Ties

Ivanishvili, who is campaigning on promises to provide free health care and improve schools, pensions and living conditions for rural people, has criticized Saakashvili for stifling free speech and provoking a war with Russia. The billionaire has in turn been denounced by Georgian politicians, who accuse him of being an ally of President Vladimir Putin.

“Ivanishvili has had enormous wealth in Russia,” said Giorgi Kandelaki, a ruling-party lawmaker. “It’s more than obvious that the sales of some of those huge assets and shares can’t take place in Russia without the direct blessing of Mr. Putin. In fact, Mr. Ivanishvili has never even criticized Mr. Putin.”

Since entering politics last year, Ivanishvili has remained a supporter of improving Georgia’s relations with Russia, which were damaged after a five-day war between the former Soviet states in 2008 over the breakaway region of South Ossetia. Georgia can restore control over South Ossetia and Abkhazia, another separatist region, both of which were recognized by Russia, according to Ivanishvili.

Democracy, Economy

“The key to doing so is in Georgia, not elsewhere, by improving democracy and the economic situation, making Georgia more interesting to live and invest in,” he said.

Motivating the more than 1,000 Georgian millionaires living abroad to invest in their homeland would be essential to boosting economic growth, according to Ivanishvili.

“I am sure Abkhazia and South Ossetia are burdens for Russia and we will find a common language on this issue with Russia,” he said, rejecting the possibility of another military conflict unless Saakashvili “overreacts.”

Ivanishvili estimates he has given away about 1.2 billion lari ($727 million) since returning to Georgia, sending money to pay for restoring landmarks and building roads. He wants to create a $200 million museum of modern art for his $1 billion collection of works by artists including Picasso.

He says that he spent as much as $10 million since entering politics.

Parliamentary Majority

While polls show Saakashvili’s party losing support to Ivanishvili’s opposition coalition before the elections, the billionaire’s allies remain short of a parliamentary majority. As many as 36 percent of likely voters would back Saakashvili’s National Movement while 18 percent would support Ivanishvili’s party, according to a nationwide survey conducted by the National Democratic Institute and released July 16.

Ivanishvili said he doesn’t trust the survey and expects to secure a majority in the legislature, adding that he will refrain from calling for public protests if the vote is free and fair.

To contact the reporter on this story: Helena Bedwell in Tbilisi at hbedwell@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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