Billionaire Bidzina Ivanishvili to take over as Georgia's new PM

Georgia's richest man has started talks on formation of a government for the former Soviet republic yesterday and sought to address fears over his links with Moscow by saying his first visit abroad would be to the US.

Billionaire Bidzina Ivanishvili called on president Mikheil Saakashvili, a staunch US ally, to offer his resignation after the parliamentary election on Monday, which the president conceded his party had lost to Ivanishvili's coalition.

Saakashvili, who has dominated Georgian politics for around a decade, has offered no comment, but according to allies, he would see out his final term, which comes to an end next year. Meanwhile, analysts say an awkward period of cohabitation is set to begin.

The Georgians who welcomed Saakashvili's acceptance that his party had lost an election were joined by western governments thankful that the election did not ignite unrest in the Caucasus nation as some had feared. The country is a key energy conduit to Europe.

Ivanishvili, 56, had made his plans to become prime minister clear. This is expected to happen after after reforms weakening the head of state take effect following the presidential vote expected some time in 2013.

Ivanishvili, a political novice who made his fortune mainly in Russia, acknowledges his six-party coalition is fragile and that he faced a difficult balancing act between the west and Moscow, which welcomed his election victory as a chance for improving ties.