East Capital Pulls Out from Troubled Georgia Grocery Chain Populi

Sweden-based asset management firm East Capital Explorer has sold its stake in one of Georgia’s largest private food retail chain – Populi – to Ioli Supermarkets. The exit comes nearly two years after the initial investment of EUR 3.7 mln in the popular food chain. The proceeds of the sale of its 30.7 percent stake, however, is only EUR 1.7 mln. In 2010, it was discovered that there was mismanagement in the company, and it is now on the brink of bankruptcy. East Capital has expressed their disappointment over the investment but is pleased that their investment manager was able to salvage a portion of the funds. They also highlighted the benefits of diversifying their investments vis-a-vis the current situation with Populi. The initial investment was made through a bridge loan that was later converted to shares and share options. A provision was also made giving the grocery chain’s management and other shareholders the option to buy back the shares within a period of one year, but this right was not exercised at the time.