Georgia Compact - Georgia Regional Development Fund

The GRDF (original budget $32.5 million; total disbursed: $32 million) was a risk capital fund made of loans and equity investments that sought to increase investment in, and improve the performance of, small and medium enterprises (SMEs), particularly in regions outside Tbilisi. The activity created a professionallFy and independently managed investment fund to provide capital to SMEs, offered technical assistance to companies within the GRDF portfolio, and identified legal and policy reforms needed to encourage further investment in SMEs. The investment fund manager reported to an independent GRDF governing board comprised of individuals with financial and development experience acceptable to MCC and MCG. This Board also acted as an Investment Committee and approved every investment or divestment proposal from the investment fund manager. MCC maintained a seat as a non-voting observer on the Board.

GRDF’s primary objective was maximization of development returns, defined as a combination of annual changes in four indicators relating to wages, revenue, taxes, and supplier purchases. These indicators were tracked throughout the life of the GRDF. It was also expected to earn a reasonable financial return from investments in SMEs. While the GRDF was open to investment in all sectors, of particular interest were SMEs involved in agribusiness and tourism. The selection process was based on the viability of proposed investment opportunities based on the quality and experience of the management and/or owners, their competitive advantage and market position, and their prospect for dynamic growth, among other factors that contributed to a strong partnership. Investments typically ranged between $500,000 and $3 million and were in businesses that generally had less than 250 employees and less than $5 million in revenue. GRDF investments financed a variety of growth-oriented activities, such as purchase of new technologies, access to export markets, and expansion of production.