As Turkey’s private equity market has hotted up in the last few years, most of the attention has inevitably focused on the country’s largest city, Istanbul. Recent acquisitions like Pronet Güvenlik, Penti CorapSanayi, Frigo-Pak and Yemeksepeti are all based there.

However, the vast area of Anatolia to the east of Istanbul is starting to yield some serious private equity opportunities. Indeed, the European Investment Fund is currently running a request for proposals to run an Anatolian private equity fund targeting around €30 million.

Historically the region has been seen as something of a backwater, with poor infrastructure and low levels of investment. “From a cultural and economic perspective, Turkey has been divided,” explains Sam Bodeur, an adviser to The Riverside Company, who was born in Anatolia. “You had the elite in Istanbul; but outside of this there were few hospitals, roads or ports and many migrants made their way to Istanbul.

But in the last few years there has been a dramatic change, he says. “Anatolia is now waking up as highways, sea ports and airports have been built and healthcare and education have improved. For example, there used only to be 400 hospitals in the region; now there are 1,300.”

This transformation is partly due to Europe’s desire for a secure energy supply from countries like Iraq, on Turkey’s eastern fringes. “This needs to be a safe bridge, so income distribution and terrorism issues have crept up the agenda,” says Bodeur. “As a result, there has been a determination to ensure security in Anatolia through economic development.”

It’s also partly due to the government’s desire to boost exports, as part of its drive to reduce its current account deficit. In June, the government made US$14 billion available for investment, and $8 billion of this was dedicated to East and Southeast Turkey. And the trend is upwards: according to Bodeur, exports from the top 250 Turkish companies outside Istanbul, Ankara and Izmir rose from US$6 billion in 2005 to $16 billion in 2010.

Anatolia has also benefited from the decline in Turkey’s exports to Europe, a consequence of the escalating financial crisis in the region – which has forced Turkey to focus more on the markets east and south of its borders. “Five years ago, 60 percent of Turkish exports were to Europe,” says Memet Yazici, managing partner of TRPE Capital. “Now, that has fallen to the low 40s [percent] and trade is moving towards the East, Middle East and Africa.”

In future, more and more companies will remain in Anatolia and become world class there rather than moving to Istanbul, Yazici argues. “In Anatolia, they can be closer to their customers, but also the quality of life is improving and is cheaper than in Istanbul.” He adds that the next deal he expects to close will be in Anatolia.

Riverside estimates that there are already around 600 Anatolian companies with enterprise values of between €20 million and €200 million, of which between 15 percent and 20 percent will be investible.

It is still early days. But with some significant players now actively targeting Anatolia, it may not be long before we’re hearing a lot more about deals in this up and coming region.