US alternative assets manager Kohlberg Kravis Roberts has made its first investment in Turkey, buying shipping company UN Ro-Ro, valuing the company at €910 million ($1.3 billion).
KKR will acquire 97.6 percent of the shipping company’s shares in Turkey’s largest buyout led by a financial sponsor. However this does not count Turkish pension fund Oyak Group’s buyout of steel company Erdemir in a $2.96 billion private equity-style, leveraged buyout (€2.09 billion) last year.
KKR entered exclusivity on the deal in August. However, it had acquisition financing secured before then. The deal’s financing was raised before liquidity problems in the global debt markets effectively closed the leveraged loan markets, according to a source close to the bid.
Local banks Turkiye IS Bankasi and Garanti Bankasi provided the financing for the deal, indicating the extent to which the Turkish banking sector has progressed on the back of recent consolidations in the region. Buyout firms have in the past had to turn to international banks to fund deals in the country, according to local sources.
KFW has also provided financing for UN Ro-Ro to buy four boats.
The source said: “KKR is looking into the MENA region and Turkey a little more. It was an opportunity that presented itself and there aren’t a lot of assets of that size in the country.” The deal was sourced in Italy and run out of London by KKR partner John Pfeffer.
KKR has a typical sweet spot of $5 billion and so this deal and emerging markets deals generally are typically at the bottom end of its deal range.
Interest in Turkey and the neighbouring Middle East and North Africa region has been growing lately. The Carlyle Group opened an office in the region last year. US buyout firm TPG also carried out its first transaction in Turkey last year with the acquisition of brewing company Mey Icki for $810 million.