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CONTEXT AND TRENDS
There is not a lot of optimism among firms in Georgia in regards to workflow. "In general it is a tough market....

CONTEXT AND TRENDS

There is not a lot of optimism among firms in Georgia in regards to workflow. "In general it is a tough market. There isn't much FDI, it's not shrinking, but not growing either so there is less work going around. A flight to quality has benefited some and left others in the shadows," says one partner and another agrees: "Firms have gone into survival mode. The work can be very demanding and interesting but you only get half the fee. But still a year ago it felt like there was no bottom, almost as though you had to work for free."

The market is not helped by the uncertain political environment preceding national elections: "It is not a stable political environment with politics very emotionally fraught," explains one partner. "This leads to a paranoid government that clamps down on everything. So whilst unlike any other ex-soviet state, retail level corruption has been stamped out and the courts aren't corrupt, still there are no independent institutions without the parliamentary rubber-stamp."

What projects and transactions there are in the market tend to be at the very high-end, the types of deals that even the Government cannot interfere with. "The potential has to be really big for people to invest," says one partner, "so big that politicians and businessmen won't get involved". One example of such a deal is the proposed oil and gas pipeline running from Central Asia to Turkey. "There are squabbles over whose pipeline will transport to Europe huge amounts of natural gas from Azerbaijan, Iran, and the Stans," explains one partner: "It doesn't matter which European project wins for us. To pick up the gas at the Georgia-Turkey border it has to go through Georgia and Azerbaijan and BP will always be in the pipeline…so to speak."

Staying in the area of project finance, firms are also optimistic about the potential growth in hydropower projects on the Turkish border. "There is a huge potential for profit (arising from Turkish energy demands)," says one partner, adding the caveat "but one, politically this is being held up by national conditions and two the Georgian government won't give sovereign guarantees on projects because they are forbidden by the IMF."

One of the biggest stories of the year was the placing of shares in the Bank of Georgia Holdings on the LSE through the listing of global depository receipts (GDRs). Firms also report that debt capital markets work in the last 16-18 months has been "strangely busy", though this seems partly because of a government drive to put the country on the map.

There has been less activity in M&A, with firm's mainly seeing the return of older deals for restructuring. Though according to one partner: "There has been a small but definite increase in activity since 2011. On small to medium sized projects in medical, banks, manufacturing and real estate."

RISING STARS

BGI Legal
Unana Gogokhia