Moving Forward at the Abkhaz Pace

Khvicha Makatsaria made his fortune in Ochamchire but lost it with his home in Abkhazia. Continuing his business career in Russia, he built pavilions and ran a chain of petrol stations before diversifying his undertakings. His business assets in Georgia, where he returned to in 2008, include Telasi, Tbilisi energy, Telmico, Beeline and several others. Rarely seen in the public spotlight, today, the businessperson tells the story of his life and commercial activities.

“I am not from Tbilisi. This city was unfamiliar to me twenty years ago. I am also not used to publicity. Nevertheless, I will tell my story and how I got to where I am today.”

Our meeting with Khvicha Makatsaria, who owns and manages several systemically important Georgian businesses, was not easy to arrange. The interview proceeded under certain conditions but turned out to be successful. From the first steps until today, his story will now be known to the public. Ladies and gentlemen, meet Khvicha Makatsaria.

Georgian society and relationships were unfamiliar to him and his family – his wife and children, of whom he is particularly proud. He also values his friends, business partners and everyone who has been part of his everyday life since his return in 2008. Before that, he would come to Georgia as a guest for a few days. “I do not think I ever spent more than a week in Tbilisi before 2008. My brief visits were usually of a business nature, but those were mainly emotional investments. Before permanently relocating to Georgia, I had already invested and lost $20-25 million. I do not blame anyone but myself for those losses.”

He quickly refutes my suggestion that he made his first money in Russia. “No, I had quite a successful business before that.”

– Do you mean in Abkhazia?

– Indeed, in my home city of Ochamchire.

– What kind of business was it?

– Hazelnuts. I will tell you the whole story.

Firs Revenue – Ochamchire

– Do you still know the Abkhaz language?

– I understand everything, but I have not practiced speaking the language for many years. I still communicate with Abkhaz people – my friends from university, with whom I never severed ties.

Khvicha Makatsaria graduated from Sokhumi State University (SSU) with a degree in Economics. He witnessed the 1988 academic split when a branch of the Tbilisi State University was opened in Sokhumi. Relations between Georgians and Abkhazians began deteriorating during this period. Despite the split, Makatsaria remained at SSU. Together with Merab Akhalaia and Gia Dochia, he was one of only three Georgians to do so. He graduated from the Abkhaz-language Faculty of Public Economy Planning and was awarded the Red Diploma. By that time, new economic opportunities and cooperatives were appearing all over the country, and Makatsaria’s head was full of business ideas. However, after several unsuccessful undertakings, he worked as an economist at the local poultry plant. His salary was good – when the average Soviet worker’s monthly wage was one hundred and twenty roubles, the young Khvicha earned four hundred roubles and various bonuses.

Nevertheless, the Abkhaz arrogance and youthful restlessness took over, and Khvicha Makatsaria’s career in agriculture ended after a few months. This was due to a disagreement with the factory owner, which Makatsaria still recalls today: “I refused to perform a mundane task and quit the job after an emotional outburst.” He spent the next few months hanging out with his friends, trying in vain to start a business. However, his fortunes changed when he met his namesake, Hamlet Makatsaria.

“He was one of the richest men in Georgia, possibly even the whole Soviet Union,” recalls our respondent. Hamlet Makatsaria studied in Moscow, where one of his friends at university was the future Trade Minister of the Soviet Union. This friendship allowed him to become the head of the influential Office of Commerce in Abkhazia, which conducted trade relations and barter operations with capitalist countries. It exported Soviet produce such as tea and hazelnuts. It imported various goods – from cigarettes to expensive household appliances such as fridges or the popular SHARP cassette players. Hamlet Makatsaria worked in Sokhumi, but he invariably spent his weekends in his home region of Samegrelo. On his way to Zugdidi, he would stop at the restaurant where Khvicha Makatsaria’s father worked as a cook.

“My dad has a story of his own,” laughs Khvicha. “Our family was far from poor. My father had a good income, but like most other wealthy people in the Soviet Union, he hid his revenue. I remember him driving an old white Lada Niva. I kept telling him to get a new car. He finally agreed – but the new car was also a white Niva, and he even kept the old number plates to avoid people gossiping. That was the Soviet reality.”

During one of his visits to the abovementioned restaurant, Hamlet Makatsaria met the young Khvicha. He persuaded him to take over managing a business that involved collecting hazelnuts in the Ochamchire-Gali region and selling them to state companies. The hazelnuts were grown in Abkhazia and shipped to Japan in return for appliances and goods worth one hundred or three hundred times more. Hamlet Makatsaria had the following proposal for his young namesake: Whatever number of hazelnuts Khvicha brought to the base in Gulripshi, he would be given electronic appliances worth ten times more. He could then sell those appliances and make good money.

Through this deal, Hamlet Makatsaria solved the issue of hazelnut procurement and sales in the Ochamchire-Gali region while also giving employment to Khvicha. The young man had enough savings to buy a vehicle for transporting the produce and soon made his first purchases. “I must have seen all of Abkhazia during this period. I went to villages where I never imagined I would find people, let alone hazelnut plantations.” Khvicha brought the first shipment of hazelnuts to Gulripshi and was paid in kind – one hundred and fifty fridges, television sets, cassette players and other appliances, as well as cigarette brands such as Pall Mall and Winston, which were in high demand. Khvicha’s warehouse in Ochamchire was soon filled with imported goods. When it came to sales, he was helped by resellers from Zugdidi. The warehouse was emptied within a few days: Around 30% of the appliances were sold locally, while the rest were shipped to Central Asia, bringing in the first streams of revenue.

“We ended up with five or six boxes full of Russian roubles. There were no electronic counting machines, so we had to count everything by hand. My business partners and I divided the cash and put it in cigarette boxes. I could not fit my share in my car, so I borrowed my dad’s Niva. I drove to Gulripshi and met Hamlet Makatsaria. “You are quite special,” he told me as we spoke in his office. “Nobody has collected and brought as many hazelnuts here as you. Now take this money, go home, and buy your father a new car. Buy whatever you want; just remember never to keep money at home. The thing about money is that either you own it, or it owns you. You are still young, so if you start hoarding money now, it will enslave you. Keep reinvesting funds – especially now, as the time is right for it.”

“At the time, I did not fully understand my namesake. He seemed a little bit strange to me,” Khvicha Makatsaria recalls. Nevertheless, he followed Hamlet’s advice and started buying all the critical facilities in central Ochamchire – shops, beauty salons, electronics stores, a restaurant chain, and the local lemonade factory. The young Khvicha also owned the first commercial bank in Ochamchire. As Khvicha Makatsaria moved his attention from provincial Abkhazia to Sokhumi, relations between Georgians and Abkhazians had quickly deteriorated. With his business partner Temur Aronia, Khvicha was also conducting commercial activities in Russia, shipping tea, tobacco, and other products to Omsk. However, as the conflict in Abkhazia intensified, Khvicha was forced to move to Moscow with his family and business partners. There he proceeded to establish new companies with Temur Aronia.

It is not easy to estimate the value of properties and businesses that Khvicha Makatsaria left behind in occupied Abkhazia. We are talking about millions of dollars. But Hamlet Makatsaria’s advice to never let money take control of him would stay with Khvicha for the rest of his life. To this day, he continues to invest in people and projects – mainly in Georgia, but also in European real estate and innovative technology.

Khvicha is most emotional when he talks about Abkhazia. He reiterates that he still maintains old connections and relationships. His warmest memories of Abkhazia are not from Ochamchire but the village of Dikhazurga in the occupied Gali region, where he would spend three months with his grandmother each year. “I left everything behind. I cannot say that I still dream about Ochamchire, but Dikhazurga is always with me.”

Niko and Khvicha

One of the more sentimental reasons for trying to arrange this interview was to talk about Niko Kvaratskhelia – a young man incredibly special to the Forbes Georgia team and the whole country. Niko’s social network Feedc is in Khvicha Makatsaria’s company portfolio, where he is listed as a partner. The tempo and energy of his speech decrease when he talks about Niko. The “golden boy” spent a lot of time with Khvicha in the final years before his death. “Niko reminded me of myself when I was starting out in Ochamchire. I mean his speed of action, persistence and impatience. Otherwise, I could never compare myself to this twenty-one-year-old boy – his intellect and knowledge were on a different level,” Khvicha recalls with a smile.

“His head was full of amazing ideas that translated into unique projects. Someone like that only comes along once a century – a true gift from God. And then he was gone, taken from us by envy and malevolence. Because people could not accept that someone so young could be so incredible, well-educated and full of ideas. I lost this amazing boy, and so did the whole country. We lost someone with boundless skills and talent.” At this point, I try to steer the interview away from Niko, as it is evident that neither of us could continue to talk about him without shedding a tear.

Next Stop – The Russian Federation

“Our first business in Russia was building pavilions and booths in the city center,” Khvicha Makatsaria recalls. “That is when one of my business partners, who was also from Ochamchire, proposed to build a modern petrol station in Moscow – something that the Russian capital did not have at the time.” Indeed, fuel distribution was primarily happening through mobile tank trucks, which the Mayor of Moscow brought in to satisfy the growing demand. With equipment imported from Finland, Makatsaria and his group built the first fully-fledged modern petrol station. They would add another seventeen stations in the space of a few months. Dozens of chains of petrol stations would pass through Khvicha’s business group over the coming years. By then, the revenues had already been reinvested into various entertainment, gambling, and restaurant chains. Makatsaria and his partners were even running the restaurant and casino of the National Hotel next to the Kremlin. At the same time, they bought various properties and land plots, enthusiastically reinvesting money on behalf of their company.

The company and businesses grew fast. The group became quite influential and well-connected in Moscow. New businesses were added, and new sectors were explored. At the same time, the decision was made to start investing in Georgia. The first investments back home were made in real estate and restaurants.

The Georgian Comeback

GMC Group should be a familiar name to the Georgian business community. The first investments were made by Khvicha Makatsaria and his partners in the restaurant business – Kalakuri, Matryoshka, and Old Tbilisi. There were other, less successful ventures. Expensive mistakes included a fruit processing enterprise in Adjara and the state company Hidromsheni. The latter was a particularly ridiculous case where Makatsaria’s group ended up paying money for the Hidromsheni brand and little else. The government sold them an empty company without any assets.

“I will never blame anyone but myself for these mistakes,” Khvicha insists. “It is one of the rules that I follow in my life: Whether I invest through emotion or intuition, with proper calculations, business plans and due diligence, nobody is insured against mistakes – especially in business. Nevertheless, we only lost money in Georgia until 2009, when I relocated here and installed an oversight system. The business began to grow; the losses decreased. I stopped taking emotional decisions and did everything through methodical calculations.”

– Is this a complete list of your businesses in Georgia and abroad?

– It would have been easy for you to obtain this information, as all our companies are transparent and audited each year. Additionally, most of them are subject to strict government regulations.

– Businesses usually try to keep their distance from industries that the government tightly scrutinizes. You are the opposite.

– What do I have to hide? What does the management of these companies have to hide? Most of them have been bought transparently at auction. As for government regulations and scrutiny, I presume you meant the energy and transport sectors?

– Communications as well. Several months ago, you bought a 100% stake in VEON Georgia/Beeline soon after the start of the Russian invasion of Ukraine. Even before that, when you owned a fifth of the company’s shares, there was plenty of government scrutiny. You also used to own Caucasus Online, which you sold to an Azerbaijani company.

– I would like to clarify and confirm that the issue of Caucasus Online is closed.

– I do not know about you, but I consider this your most profitable deal, at least in recent years ($61 million).

– That may very well be the case. I want to add that I initially intended to merge Caucasus Online and Beeline and implement a much larger project, but as it is, the deal is closed and done. As for the deal to buy the 100% stake in Beeline, that is also true, but I would like to make one correction: The deal was closed in the aftermath of the Russian invasion of Ukraine, but the negotiations took place and the agreements were reached a lot earlier last year. So things were finalized in 2022. All the terms of the deal are transparent; you can look them up.

– Did you personally speak to Letter One owners Petr Aven and Mikhail Fridman to finalize this deal?

– No, all negotiations were conducted with their management team, who probably agreed to everything with the owners. I do not know anything further.

– Is it true that attempts to buy VEON Georgia/Beeline continued for several years?

– Yes, that is correct. It took more than three years but ended the way it did.

– Our readers would be interested to know how the Russian firm VimpelCom, which operates the Beeline network, first came to Georgia. There were rumors that the goal was to end the oligopolistic deals between GeoCell and Magti on the market.

– That is incorrect. The story is entirely different, and if you want to know about Beeline’s entry into the Georgian market, it all started much earlier for our group, which became interested in expanding into the communications sector and setting up a telephone company as early as 1996.

Khvicha Makatsaria’s Assets in Georgia