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Cerberus and Garanti ink Turkey partnership

The two groups will provide an initial $400m to invest in Turkey and the surrounding region, and may raise a further $600m next year.

Cerberus Capital Management and Garanti Securities have agreed to provide $400 million to invest in Turkish businesses, the former said in a statement. The partners expect to raise additional capital next year, creating a $1 billion jointly managed fund.

The generalist fund is likely to make equity investments of between $50 million and $250 million, focusing on Turkish-based companies — although it may also invest in the surrounding region where Turkish companies have strong economic interests.

It is unclear how much of the initial $400 million each group is contributing. Garanti Securities is a subsidiary of Garanti Bank, Turkey’s second largest bank with $96 million in assets. Cerberus declined to comment beyond the release.

Turkey

Turkey’s private equity market has developed rapidly over the last five years, driven by the country's strong economic growth and a maturing financial sector. Turkey is expected to average real GDP growth of 6.7 percent over the next six years, according to Cerberus, thanks to favourable demographic trends and low interest rates.

Several Turkey-specific funds have been raised in the last year, including some by local firms, and competition for deals is expected to increase in the next 18 months, managing director at The Carlyle Group Can Deldag said in a prior interview. Last month, ratings agency Standards & Poor's upgraded the country’s local currency credit rating from BB+ to BBB-, pushing Turkish debt up into investment-grade territory again for the first time in more than 15 years.

“We believe that Turkey offers significant investment opportunities, and we look forward to investing in the region, which will promote economic growth here and around the world,” Cerberus Global Investments chairman Dan Quayle said in a statement.

Cerberus, which has around $23 billion under management, launched its fifth fund in April, targeting $3.75 billion. The firm is also in the process of raising its first senior debt fund, which according to Pennsylvania Public School Employees’ Retirement System documents is expected to raise around $750 million.