Turkey roundtable 2013: Maturing nicely?

Turkey has been tipped for some time to become a hotbed of private equity activity, given its geographic position between Europe and Asia and its strong supply of founder- and family-owned companies ripe for expansion. Now, nearly a decade since Turkish private equity got its start, and with GDP growth forecast to hit 5% in 2013, PEI talks to four of the market’s key players to find out if Turkish private equity is finally set to take off.

  Meltem Akol is a partner at Akol Avukatlik Bürosu in Istanbul. Her firm, an affiliate of White & Case, is among the top ranked M&A advisors in Turkey. She has over 15 years’ experience in mergers and acquisitions, joint ventures, privatisations and real estate transactions. She is a graduate of the University of Istanbul’s Faculty of Law and has an LLM from Harvard Law School.

Jason McGibbon is the partner overseeing Bridgepoint’s investment activities in Turkey and also leads its consumer team. He currently sits on the board of TüvTurk and has completed investments in companies including  Safestore, Infinitas Learning and Hobbycraft. He has a degree from the University of Strathclyde Business School and is a qualified chartered accountant.

Kerem Onursal is a director and investment committee member at Turkven. Onursal has been closely involved with the firm’s investments in Roma, Pronet, Mavi, Migros, Golf and Dogtas/Kelebek. Previously he was with McKinsey & Co. in its Berlin office. Kerem has a degree in industrial engineering and economics from Northwestern University.

  Kerim Turkmen is a partner at Mid Europa and head of its Istanbul office. Prior to joining Mid Europa in 2007, he was a principal with GMT Communications Partners. Turkmen received his B.Eng. in mechanical engineering from Imperial College and his M.Sc. in accounting and finance from the London School of Economics.

PEI: If someone asked why they should invest in Turkish private equity today, what would you tell them? 

Kerem Onursal: If you look at Turkey, the fundamentals are there. Over the next few years Turkey is expected to be a trillion-dollar economy. There are a lot of large companies that were established many decades ago, so you can see their track records. They were founded mostly with entrepreneurs and now need the support of institutional partners, so the right elements are there – it’s a perfect mix for private equity firms to come and bring their value added capabilities, to help Turkish companies grow and institutionalise. 

  Kerim Turkmen: For Turkey, I think the biggest change came a decade ago with the new government and ensuing political and economic stability. Prior to that, when we had considered investing in Turkey, it was always a very interesting and attractive growth market – but it was also more volatile, with major ups and downs. In the last 10 years, Turkey has become much more stable, which is evident in the macro fundamentals such as inflation, interest rates, public debt and budget balances. All of these indicators have stabilised and improved.  

With this positive macro backdrop, Turkey is basically fulfilling its potential. It is a big market. We look at the entire Central & Eastern European region with over 15 countries, and Turkey within this region is the largest market both in terms of population and economy. It is a very diverse market with a wide range of investment opportunities. We also like Turkey because it sits at the centre of Europe, CIS, and MENA regions, which have low correlation with each other. So to the extent you have a slowdown in one of these regions, you can make up for it with activity from one of the other regions. For us, Turkey offers good diversification. 

Jason McGibbon: When we started to look at Turkey a few years ago and made the decision to open the office here, we felt Turkey had had a great 10 years – a great run from a macroeconomic stability perspective. The number of businesses where private equity can make a difference is increasing. There is a great deal of openness to international best practice. 

I think we are talking about a location that probably is already – or is certainly on the way to becoming – one of the world’s major economies. 

  Meltem Akol: What’s puzzled me in the past was all the attention that CEE got. And with all due respect, looking around at various jurisdictions and benchmarks, I thought Turkey deserved just as much focus and attention as CEE did, if not more. I agree Turkey is fulfilling its potential. There are setbacks temporarily; some political instability may come here and there, every now and then. But absent major setbacks, the positive trend is going to continue. 

The Turkish people have an entrepreneurial spirit, that’s for sure. So the combination of that independent entrepreneurial thinking and spirit with the desire to grow a business, to do more with it, to become more international, to widen the horizons, the scopes, etc., has created this fertile environment for private equity investors. And I see quite a lot more eagerness and openness from Turkish entrepreneurs to listen to the terms offered by private equity firms.