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Turkey’s Fundamentals Attract PE

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March 8, 2012

Turkey is emerging onto the global PE scene again. A Reuters report on a panel about investing in Turkey at this week’s SuperReturn, noted that Carlyle, among other global buyout firms, such as TPG, are seeking investments there.

 

A couple of exits in the region have validated the PE investment activity in recent years. The report says that M&A deals with Turkish targets shot up to 218 deals worth USD 24.9 billion last year from 167 deals worth just USD4.0 billion in 2009, when activity was decreased due to the global economic crisis, according to Thomson Reuters data in the report.

 

But PE is much smaller than M&A activity, which at its peak in 2008 was about USD 2.8 billion worth of deals. A high economic growth rate and the political unrest in neighboring countries means that ME focused funds are looking more at Turkey than other countries in the region.

 

But there is stiff competition for a the few deals that come to market. It is the local players and few global buyout firms with a domestic presence who tend to do well there, according to Reuters.

 

The fundamentals in Turkey are similar to BRIC emerging markets.  The adjacent chart shows FDI trends investment in Turkey. In a recent advertorial (a sponsored article) in the WSJ, Catherine Bolgar  writes, about the drivers of M&A, privatization and attractive demographics in a population of 72 million that has a high-percentage of  young adults and an emerging middle class with rising incomes.

 

The utilities sector, automotive, banking and financial services, fast-moving consumer goods are the sectors attracting the most investment, writes Bolgar. (Image Sources: chart is from Invest Turkey ; photo credit istockphoto)

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