Carlyle invests in Turkish hosiery

Carlyle’s $500m MENA-focused growth capital and buyout vehicle will acquire a 30% stake in family owned Penti.

The Carlyle Group has agreed to acquire a 30 percent stake in Turkish hosiery company Penti. The deal is expected to complete in November. Details of the transaction were undisclosed. Alp Guler, vice-president of Carlyle's MENA buyout team, told Private Equity International the firm financed the deal with 100 percent equity.  

Penti: benefiting from changes
 in Turkish retail sector

The stake in the hosiery business was acquired from the two founding families of Penti, who continue to be the majority shareholders, owning the remaining 70 percent of the business. Mid Europa Partners and Turkven reportedly also took part in the bidding process. Both firms declined to comment on this story.  

The fact it is a minority stake and no debt was used to finance the offer may have won Carlyle the deal, Guler said. “Those factors along with the personal chemistry of our team in Turkey with the company shareholders have pushed the deal forward. Unlike the Anglo-Saxon world, a lot of Turkish businesses in the mid-market do prefer to use internal financing to grow. Companies don’t tend to use leverage unless they really have to and Penti is a good example of that.”

Carlyle will make the investment from its MENA-focused vehicle, a $500 million growth capital and buyout fund raised in 2008. This will be the sixth investment from this particular fund and according to Guler the “bulk of the fund” has now been deployed.

Earlier this year, the firm used its MENA fund to acquire 48 percent of Bahcesehir Koleji, a Turkish private education provider. In December 2011, Carlyle bought a 42 percent stake in Alamar Foods, a franchise operator of Domino’s pizza and Wendy’s hamburgers in the Middle East and North Africa region. 

Other MENA investments include: General Lighting Company, a Saudi Arabian lighting fixtures manufacturer; TVK Shipyard, a Turkish shipbuilder; and Medical Park Saglik Hizmetleri, a Turkish healthcare company.

Penti already has a strong vision which Carlyle does not aim to change, Guler said. The company has benefitted in recent years from changes in the Turkish retail sector, he added. “There has been a shift from unorganised retail, like bazaars and markets, to organised retail. In the last fiveto seven years, more shopping centres have emerged. Customers have more money and they increasingly like to buy their underwear and swimwear in established shops like Penti,” Guler said.

In recent years, Turkey has become an attractive country for investors, Guler said. “After a decade of political and economic instability, Turkey has made a transition. It has a stable political system and a business friendly environment. All sorts of financial products are growing which will also to continue to fuel the debt market. This is a very interesting investment environment for everyone.”

Carlyle is not the only firm that sees Turkey’s potential. In June, London-based Cinven bought Turkish security alarm company Pronet. In July last year, Mid Europa Partners acquired a majority stake in private hospital operator Kent Hospital Group.

In addition, the number of private equity funds focusing on Turkey is growing. In March, Pera Capital Partners held a €40 million first close for its debut fund, which invests in small to mid-market companies in Turkey. In May last year, buyout firm Mediterra Capital Management held its first close on €100 million for its first Turkey-focused fund, which has a target of €300 million.

PEI’s annual Turkey Forum takes place on 19-20 September 2012.