| Arda Kutsal's Webrazzi is now in English! |
| 25 September 2009 |
Yes! For all English-speaking, technically-minded, gifted entrepreneurs as well as deal flow optimizers, VCs and angel investors for the Turkish market, good news has finally come - Webrazzi is now in English.
The "Techcrunch" of Turkey has been providing daily updates on the Turkish technology and startup scene since 2006. Arda Kutsal's very successful brain child Webrazzi appears to be doing well enough that he has finally branched out to the English speaking world - now called Webrazzi Global.
For those interested, the new link is:
Webrazzi Global
http://en.webrazzi.com/
Check it out!
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| AIG Unties Turkish Blue Voyage Fund |
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At the beginning of September, a contact from AIG sent a press release concerning the AIG Blue Voyage Fund - Turkey. As we all know, AIG has had some trouble of late, and it only seems natural that they should streamline their operations. Per the press release:
American International Group, Inc. (AIG) has announced an agreement to sell a portion of its investment advisory and asset management business to Bridge Partners, L.P., a company owned by Pacific Century Group (PCG), the Hong Kong-based private investment firm. AIG is retaining its in-house investment operation that oversees approximately $480 billion of assets under management.
The purchase price of approximately $500 million consists of a cash payment of approximately $300 million at closing, plus additional future consideration that includes a performance note and a continuing share of carried interest.
"After conducting an extensive and rigorous auction process, we concluded that this
transaction provides fair value for AIG and achieves the greatest long-term stability and potential for the business, its clients, business partners and employees," said Alain Karaoglan, AIG Senior Vice President - Divestiture.
The units being sold operate in 32 countries and manage approximately $88.7 billion
of investments of institutional and retail clients across a variety of strategies, including private equity, hedge fund of funds, listed equities and fixed income. Win J. Neuger will continue as Chief Executive Officer of the new business and the existing management team will remain in place.
This transaction includes the Blue Voyage Fund. Managing Director Serkan Elden remains at AIG Investments. The Blue Voyage Fund link has been removed from the Index.
For other Grandstanding posts regarding AIG and the Blue Voyage Fund, click on the labels below.
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Labels: AIG, Blue Voyage Fund, Serkan Elden
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| RHEA Investments Joins with Stowbridge Partners; Purchases Vakif VCIT Shares |
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RHEA Investments, a London-baseded private investment and project development company in the fields of real estate, health, energy, agriculture, and financial services, has made a few moves in the last month that should position it for permanency in the Turkish environment. RHEA Investments established a foothold in Turkey in 2006 and have made successful investments on a MediaMarkt project in Izmir as well as continuing development of hotel projects in various Turkish cities.
Posted about a month ago on the Linkedin group - Venture Capital and Private Equity in Turkey, Memet Yazici, group leader Head of Asset Management at Rhea Investments, makes two announcements regarding the future direction of Rhea Investments. First and foremost last month, RHEA Investments announces that it has joined forces with Stowbridge Partners. According to the post:
"Stowbridge Partners and RHEA Investment Group are joining forces to launch a venture capital and private equity management as well as a corporate advisory unit under the RHEA name. Accordingly, Stowbridge venture capital management and corporate finance advisory practices will merge with the RHEA team.
The new entity will combine the strength of RHEA’s business in the real estate, energy and healthcare sectors with the Stowbridge Partners’ extensive experience in Venture Capital and Small/Medium Enterprise Private Equity. Both teams share the same vision to produce superior returns and the same dedication to excellent execution.
RHEA’s primary office is located in Istanbul, Turkey with additional offices in London (UK) Chicago, Illinois (US), Bucharest (Romania), Izmir (Turkey) and Dubai (UAE).
At Stowbridge Partners, managing partner Kurtay Ogunc will continue his leadership and identify new opportunities for cooperation and collaboration between U.S. and the EMEA region.
About a year ago, Stowbridge Partners was taken off Grandstanding Traction's index (right sidebar) due to inactivity, or rather "off the radar". As of this announcement, they have been added again. Memet Yazici is also a board member of Stowbridge Partners.
Days after, RHEA Investments made another announcement regarding its agreement to purchase 31.15 percent of Vakıfbank's private equity operation Vakıf Venture Capital Investments Trust.
As mentioned in the Hurriyet Daily News, "The 2.1 million Turkish Liras deal is pending the approval of Turkey's Capital Markets Board, or SPK, and is likely to be finalized by the end of 2009. Vakıf Venture Capital Investment Trust was established in 1996 and listed on the Istanbul Stock Exchange in July 2000."
According to Memet Yazici on Linkedin, "RHEA has signed a definitive agreement with Vakif Bank to purchase all of the A type (controlling) and 6.15% B type (ordinary) shares of Vakif Risk Sermayesi Yatirim Ortakligi A.S. (Vakif Venture Capital Investment Trust), an Istanbul Stock Exhange listed joint stock company (stock code: “VKFRS” ). All of the remaining shares are trading on the ISE."
As quoted in the Hurriyet, "We will be particularly interested in cooperating with sector leaders, firms that are already first or second in their respective sectors, which have an ambitious global growth vision. Our goal is to grow the firms and exit them in some two to four years, like an average private equity investor would do," Yazıcı said. Rhea has already screened some 25 firms looking for an investment between 5 million and 20 million euros. "In addition to this, motivated by the construction of technoparks in Turkey in recent years, we are also planning to build a technology portfolio of some five companies," said Onur Takmak, Rhea Investment venture capital director.
Additional information can be obtained at:
The New Energy World Network - Turkish renewable energy investment trust Rhea Investments acquires Vakif Risk Sermayesi Yatirim Ortakligi
Invest IQ - RHEA Buys controlling Share of Vakif Venture Capital
Rhea comes to Turkey with international corporate investors (TR)
Overall, this looks like a nice consolidation of the industry with some good heads at work. Vakif Girisim was looking to unload this subsidiary for some time now. In fact, Grandstanding Traction posted in 2008 an interview with CFK Partners who were intending the purchase the Vakif Girisim shares. CFK Halka Arz Partners website is still under construction, so this deal appears to have fallen through.
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Labels: RHEA investments, Vakıf Girişim
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| Private Equity International Turkey Forum set for November 2009 in Istanbul |
| 14 August 2009 |
That's right, this is the latest news about a very significant event. Scheduled for November 23 and 24 at the Hyatt Regency in Istanbul, Private Equity International and EMPEA are coordinating a Turkey Forum with the main sponsors being Turkven, the Actera Group and Abraaj Capital. Endeavor is also supporting the event. I know Golden Horn Ventures tried to do something like this a year ago, and it proved a valuable spearhead to get this type of conference moving in Turkey. While the event does not seem to be significant for venture capital or entrepreneurs seeking investment, it is good to see Turkey's prominent PE executives getting together to hash this one out. The agenda looks interesting, especially the panels that will discuss the great potential that the emerging market of Turkey will have for LPs and GPs. In addition take a look at this list of conference speakers:
Sarah Alexander, President, EMPEA
Achmed Al-Shahrabani, Senior Vice President, Abraaj Capital
Uğur Bayar, Managing Director & CEO, Credit Suisse Turkey
Mete Çakmakcı, TTGV
Murat Çavuşoğlu, Managing Partner, Actera Group
Can Deldag, Managing Director, The Carlyle Group
Serkan Elden, Managing Director, AIG Capital Partners
Saki Georgiadis, Investment Director, Gartmore Private Equity
Tolga Işmen, Lawyer, Ismen
Salim Kadıbeşegil, Chief Executive Officer, ORSA Strategic Communications Consultancy
David Nieuwendijk, Senior Investment Officer Private Equity, FMO
Murat Özgen, Chief Executive Officer, İş Private Equity
Carlos Perry, Chief Operating Officer, EMPEA
Jose Romano, Head of Turkey & Istabul Venture Capital Initiative, European Investment Fund
Nikos Stathopoulos, Managing Partner, BC Partners
Seymur Tari, Managing Director, Turkven
Selcuk Yorgancioglu, Executive Director & Turkey Country Head, Abraaj Capital
Birol Yücel, Managing Director, Turkven
For most of you who have followed Grandstanding Traction over the last few years, I think you can see the significance right away about what this conference means for Turkey and the growth of private equity. What I wouldn't give to be a potential GP with a private placement memo ready to go for this event. So for all those interested in putting together a fund, dust off your elevator pitch. Registration for the PEI Turkey Forum will cost you a pretty penny.
The question will remain, "Will those types of high net-worth individuals from Turkey come out for this event?" I encourage all who are interested in making investments in Turkey to attend this event. Private equity is cyclical, and Turkey has some thriving industries yearning for investment since the recent downturn. The website specifically states that all types of institutional investors will be given complementary tickets, so we can already see the potential waiting for GPs at this event. All the relavant players will be there - so should you.
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Labels: Abraaj Capital, Actera, Conferences, Endeavor, Turkven
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| Turkey wants to export the idea of investing in firms and running them? |
| 15 June 2009 |
Can anyone tell me what the OYAK chief is talking about? Most likely another lousy report translated in English by our fine Hurriyet expose-journalists.
Export concepts, says OYAK chief
MARDIN - OYAK, Turkey’s leading pension fund which is active in automotive, steel, cement and energy, may ’export’the formula that made it a success over the past nine years, according to Chairman Coşkun Ulusoy. ’Imagine the name of any major private equity fund or pension fund worldwide, and I can guarantee you we are talking to them,’Ulusoy says.
At a time of plummeting exports amid global recession, the chairman of Turkey’s leading pension fund suggested a novel means to economic revival over the weekend: "export of concepts."
Selling a Turkish business model abroad might sound a bit far-fetched. But Coşkun Ulusoy, head of the military pension fund OYAK made it clear at his annual press briefing that this was the next project up his sleeve.
"Imagine the name of any major private equity fund or pension fund worldwide, and I can guarantee you we are talking to them," Coşkun told a gathering of business reporters and editors assembled at an OYAK’s Mardin Çimento cement factory in this historic city. "We can export concepts."
At the moment, OYAK’s exports are limited to cement, steel and cars and light trucks from its Renault-Mais division. Its 50-odd companies dominant in basic industries turned a profit of $2 billion last year and despite the harsh economic environment Ulusoy predicts the group will again be profitable this year.
But, he explained, the fund’s longer-term success may well come by selling the formula that made its remarkable success over the past nine years possible. That success, he argued, is in the fund’s unique daring to eschew the passive investment strategies of comparable pension funds in favor of a strategy of taking majority interest in firms, joining the management and actually running them.
"This is a unique model of success and its also uniquely Turkish," Ulusoy told an informal three-hour gathering. "If Turkey is going to export something, let’s export this model."
(I believe this is called private equity!?!)
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| In this crisis, what should central banks be thinking about hedge funds and LBOs? |
| 22 April 2009 |
Hello World! Sorry about the long hiatus once again, but I've been busy. It appears though that the recent downturn has not left me much to talk about really other than a few conferences here and there as well as people inquiring about work. So to go in another direction, I thought I would post something I just wrote up regarding hedge funds and LBOs and how it may concern central banks. Please note, I've posted my linkedin profile badge on the right if you feel like you would like to make contact. Cheers!
Hedge Funds May Be Usurping Central Banks Authority
Generally, Leverage Buy-Outs occur when the LBO or private equity firm borrows “or leverages” funds in order to take a controlling stake in another firm. Usually the target firm has hard physical assets and somewhat steady cash flows, or management of the target firm has orchestrated the takeover. The assets of the targeted firm are used as collateral to secure the debt taken on by the LBO firm. In some cases, firms that are bought out are private corporations, but in other cases, public firms are leveraged, bought out and taken private.
When a leverage buy-out occurs, certain issues may arise depending on the two firms’ situations. Managers orchestrating an LBO, according to Ross, Westerfield, Jaffe and Jordon, will tend to work harder since they now own a substantial portion of the business, thus reducing the agency cost of equity (2009). We already know that LBOs will customarily buyout shareholders at a price above market value, but this still leaves the area of manager’s insider information up for speculation and future research. Indeed, the fact that managers chose to buyout equity using leverage suggests prior knowledge to the fair value of the firm and begs the question whether the price paid to shareholders was at a premium or still undervalued. This also is the classical dilemma of shareholder asymmetric information when shareholders choose to sell their shares.
Historically, private equity firms have existed because limited partner investors have trusted them with their funds to make wise investments buying out firms and making a return on this investment. The objective of the PE firm and its investors is generally very clear. Now, enter the hedge fund. Hedge funds, equally, have investors that seek returns on their investments. However, hedge funds survive on making a wide variety of investments in commodities, stocks, debt and so forth, depending on the strategy of the firm. Here lies an area of ambiguity for investors and on regulation of hedge funds. Portfolios of hedge funds and strategies may change very quickly depending on market conditions, and investors need to be aware of this. Furthermore, hedge funds have been in the limelight as of late in their recent appetite for leveraged takeovers. To give an example, here is an excerpt from Reuters in 2007:
Just two years ago [2005], Henry Kravis, co-founder of buyout firm Kohlberg Kravis Roberts & Co. (KKR), speaking at a conference in Frankfurt, said hedge funds were good stock pickers but should be kept out of investing.
"Hedge funds are not set up to build value in companies over the long term," he told an audience of private equity firms and their investors.
Fast forward to last January, when KKR was involved in the buyout of for-profit education company Laureate Education Inc. Joining KKR in the investor group was S.A.C. Capital, among the largest hedge funds in the world. (Flaherty)
According to AIMA’s Roadmap to Hedge Funds, the hedge fund industry may have managed $2.5 trillion dollars at its peak in the summer of 2008 (Ineichen). As you can see, hedge funds comprise one of the largest asset classes under management. Interestingly enough this is about the size of the damage in the current US recession, but this is beside the point. Thus, it may appear obvious that central banks of various countries and government regulators are a little concerned when it appears that hedge funds may be stepping outside of their mandate stipulated by their limited partners’ PPMs.
Research has shown that hedge funds are taking on an active role in investing in firms with potential for LBOs (Huang, 2008). Based on a hedge funds initial investment, an LBO offer is more likely to occur than with any other investment institution and also shows signs of a significant increase in premium paid for the firm when a hedge fund is present. Having said this though, when there is an LBO boom, hedge funds that do partake in LBOs experience abnormal returns.
As Farrell and Lund (2007) so eloquently put it, "The rush of cash emanating from these players could be fueling asset-price bubbles. Private equity and hedge funds could create new sources of financial-market instability, including higher credit risk and a greater change of "systemic risk" in which one or more large hedge fund failures start a dangerous ripple effect across global capital markets—as occurred in 1998 with the near collapse of Long-Term Capital Management. Because all these players are lightly regulated, they can move huge amounts of money beyond the scrutiny of financial-market authorities."
For a hedge fund to use its funds to lend on a LBO, in a sense, the hedge fund is extending credit much like a bank would. This is cause for concern, since in some cases, a hedge fund’s investors may have been banks themselves who are regulated under a countries central bank. This also means that the cost of debt must either be evenly and competitively matched with other lending institutions or it might be simply more expensive. Thus, here lies another crux of the issue. Banks’ interest on lending is stipulated by central banks of the particular country. In contrast, hedge funds can stipulate their own lending terms simply depending on their desired return, thus taking the central bank out of the equation. So, we have an institution that is lending massive amounts of currency like a bank, but is not regulated like a bank. In addition, hedge fund investors are taking on added risk of paying for above market value stock for companies and entrusting third-party LBO firms to manage their exits. Finally, the public markets exist to allow firms to raise funds by selling portions of equity. By taking more firms private through debt acquisition, the “ethos” of companies’ capital structure- debt vs. equity, not to mention the public market’s existence, is circumvented. When more and more companies are supported by money that was created outside of the central banks control, this affects the central bank’s ability to control monetary supply.
Notwithstanding the recent credit debacle and the “fall” of the hedge fund industry, it is no wonder that regulators were starting to question the methods of hedge fund techniques and beginning to legislate more surveillance. Throw the recent crisis into the mix, and you have plenty of reason for more legislative rigour.
References:
Farrell, Diana and Lund, Susan. “Power Brokers” Newsweek International, October 20th, 2007. McKinsey Global Institute.
http://www.mckinsey.com/mgi/mginews/powerbrokers.asp
Flaherty, Michael. “Hedge fund-LBO alliances deepen” Reuters.com. April 9th, 2007.
http://www.reuters.com/article/GlobalHedgeFundandPrivateEquity07/idUSN0245257020070409?pageNumber=2
Huang, Jiekun, “Hedge Fund Activism in Leveraged Buyouts” (December 15, 2008). Available at SSRN: http://ssrn.com/abstract=1086687
Ineichen, Alexander and Silberstein, Kurt. “AIMA’s Roadmap to Hedge Funds”. November 2008 The Alternative Investment Management Association. http://www.aima.org/download.cfm/docid/6133E854-63FF-46FC-95347B445AE4ECFC
Ross, Westerfield, Jaffe, Jordan. Corporate Finance: Core Principles and Applications. 2nd Edition. McGraw Hill International 2009. P. 472.
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Labels: Hedge Funds, LBO
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| Turkven Makes Investment in Mavi Jeans - October 2008 |
| 25 November 2008 |
NOTE: To all my readers, I'm sorry for the recent hiatus in updates, but during the course of a full time job and starting a masters program, I've had little time for anything else. Needless to say, we are amidst an economic conundrum of sorts, but that doesnt mean that things have come to a standstill. When times look most bleak, we must all remember the cyclical nature of things.
Also, I would like to point out that my blog as well as the millions of other Blogger blogs were blocked by a court ruling inside of Turkey during a weekend in October. Apparently, the local satelite provider needed to block a blog that was posting videos of football matches, and we all got thrown in the same basket. In addition, it appears that Dogan Media has decided to envelop all of the Turkish Daily News and will no longer be running their website. Unfortunately, a lot of my previous posts have links to the TDN and will no longer work - for that I'm sorry, but it is out of my control. Life is like this sometimes.
So, in doing some housecleaning, I would like to publish the press release in its entirety from Turkven that came out in October 2008. What can we take away from this venture? Was it a last ditch effort for TVPE II to get deals done before the sh*t hit the fan? Equally, on both sides of the boardroom table, this very well could have been of critical importance for Mavi to find liquidity. Do you consider a jeans maker a conservative or risky investment at this stage? Albeit a very competitive market, perhaps the terms of the deal were too good to pass up.
 TURKVEN INVESTS IN MAVI
October 2008
Turkven has acquired a stake in Mavi, the leading Turkish apparel brand.
Founded in 1991 by the Akarlilar family, Mavi has operations in 27 countries through a retail network of 190 stores generating over US$150 million of sales in 2007.
Ersin Akarlilar, Executive Board Member of Mavi said: "Mavi’s ambition is to become a US$1 billion company with a global brand and retail operations. We have partnered up with Turkven to leverage their network and operational expertise to achieve our goals."
Turkven Managing Director Seymur Tari said: "Mavi will build on its strong denim heritage to grow into a global lifestyle brand. Mavi is a pioneer, and it serves as a role model for Turkish companies with its brand, design capability and global ambitions."
 Turkven Principal Kerem Onursal added: "We are an industry leader with a track record of investing in industry leaders. Our experience allows us to look beyond the short term volatility to identify sustainable businesses with a potential to create substantial shareholder value."
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Labels: Mavi Jeans, Turkven
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Publisher: Jon H. Black
