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It may surprise you to hear that the 114th largest company listed in the UK is Lion Finance Group (LSE:BGEO), formerly known as the Bank of Georgia Group. As its ranking suggests, it’s a constituent of the FTSE 250 — the 101st-350th largest companies on the stock exchange.
However, it’s not hard to imagine this bank even reaching the FTSE 100 one day. The stock’s surged 630% over the past five years, and is up 72% over the past 12 months.
Could it really happen?
A Georgian bank on the FTSE 100 would be impressive and a little eye-opening at the same time. Impressive to see that a bank from a relatively small post-Soviet country — and one of my favourite places to visit — has obtained a market-cap to rank it among the top companies in the world.
But also eye-opening in that it potentially highlights the relative decline of the FTSE 100. Twenty years ago today, the automatic entry point for the index was around £2.6bn. Today, that figure’s around £3.9bn — not a huge difference over two decades.
So could Lion Finance really be promoted to the FTSE 100? Well, the stock’s forward price-to-earnings (P/E) ratios for 2025, 2026, and 2027 stand at 4.9 times, 4.6, and 3.8 respectively. These multiples are significantly lower than the typical FTSE banking sector averages, which currently range between seven and 11 times depending on market conditions. This suggests that Lion’s undervalued relative to its peers.
The company’s earnings per share (EPS) are projected to grow strongly, from £13.46 in 2025 to £17.52 in 2027, reflecting solid profitability growth. Additionally, Lion maintains a healthy dividend policy, with dividends per share increasing from £3.02 in 2025 to £4.07 in 2027, and a payout ratio around 22%-23%. This is a very sustainable position.
This combination of undervalued earnings and attractive dividends suggests that Lion Finance could trade with higher valuation multiples. In fact, assuming earnings forecasts are correct, it would trade within 5% of the current FTSE 100 benchmark in 2027. This calculation assumes the stock still trades at 4.9 times forward earnings at that point. I think FTSE 100 accession could be possible before the end of the decade.
But it’s Georgian…
I love Georgia. Genuinely one of my favourite places. However, banks reflect the health and stability of the domestic economy. And while the Georgian economy has been very strong in recent years, it’s a less developed market than the UK.
It’s also a country that is increasingly politically polarised. The ruling Georgian Dream party appears to be moving Tbilisi away from European member state accession and potentially closer to Moscow.
Collectively, these features mean investors are unlikely to want to pay a premium, or even the same price for a Georgian bank as they would for a British bank. Currently, Lion Finance is around 35%-45% discounted versus most FTSE 100 banks.
It may stay this way given the geopolitical concerns, but this also means that geopolitics could be a cause for optimism. I actually sold my shares sometime before the election in 2024. That was a mistake in hindsight, but I’d forecast a more challenging reaction to the election outcome.
Right now, I’m watching from the sidelines.
