A Turkish Private Equity Web Log

In an effort to cover the Turkish Private Equity Industry - for the promotion of Entrepreneurship, the private equity asset-investment model, and the communication thereof.

AIG Rehires and Re-Enters Turkish Buyout Market with Blue Voyage Advisors
According to the Wall Street Journal, AIG is again making a push to enter the Turkish buyout/venture space. Setup in 2000, the AIG Blue Voyage Fund was a $100m (€72m) fund dedicated to private equity investing in Turkey.

Of course you may remember that those were tough times to put together a fund {with the country nearing elections, the 2001 crisis, and the devaluation of the lira}. Nonetheless, the spirit of putting together a private equity fund in Turkey was commendable and they were able to make three acquisitions of companies in the consumer and entertainment sectors which included AFM Theaters and Galatasary Sportif by 2004. Perhaps it was the trouble with board member shifts at Galatasaray that made them lose heart? Even so, the fund deliberately slowed its investment pace from 2002 to 2004 and by 2005, the fund closed with only 30% of its capital committed. Aside from Blue Voyage, however, last year AIG Capital was able to regain some ground in Turkey, taking a stake in For You, a discount fashion retailer with branches across the country.

Well, that was then and this is now. Serkan Elden, who spent six years setting up AIG's business in Southeast Europe, has been rehired to fill the post of president and chief executive for Blue Voyage Advisors. He will also be given the title of managing director of AIG Capital Partners, and will be responsible for boosting the firm's investment activity in Turkey. Elden originally left AIG Blue Voyage in 2004 to setup his own boutique investment advisory firm, 3 Seas Capital Partners, a firm that still exists today. From there, he became chief executive of Fintur Holdings BV, a joint venture of Turkcell and TeliaSonera, and a provider of mobile telecommunication networks servicing Azerbaijan, Kazakhstan, Georgia and Moldova.

So, per my last post regarding KKR's acquisition of UN Ro-Ro, and re-emergence of the AIG Blue Voyage Fund, it is interesting to note the direction of the trend. Again, we will have to wait and see who in Turkey is ready for the next buyout deal, and who will enter next.

For future reference, all of these Turkish funds and PE firms can be found in the PE/VC Index in the left sidebar.

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Posted @ 21:06   0 Comments
KKR Makes First and Largest PE Investment in Turkey
In September, some suprising news came out that KKR (Kohlberg Kravis Roberts & Co) was attempting a takeover bid for the Turkish UN Ro-Ro shipping firm. Well, news has just been released coutesy of Reuters (KKR buys 98 pct of Turk shipper in $1.28 bln deal) and Forbes (KKR Ro-Ros To Turkey) that the deal has gone through. KKR will purchase a 97.6% stake worth 882.2 million euros ($1.2 billion) from the consortium of international shippers. While this may pose as a landmark deal for private equity enthusiasts such as myself, not to mention the largest private equity deal ever to be done in Turkey, KKR first appeared to have bitten off more than they could chew. In September, there was negative speculation both from Chairman Saffet Ulusoy (who said that he would never sell) and the Turkish Armed forces as to the selling-off of national security interests.

UN Ro-Ro, a roll-on/roll-off shipping company, owns 9 ships and was founded in 1993 during the Yugoslav-Balkans War - a war that closed overland shipping routes connecting Turkey and Europe. The ships sail daily from the port of Ambarli-Pendik, Turkey carrying lorries and container vehicles filled with Turkish goods to Trieste, Italy.

Speaking on the deal, KKR's John Pfeffer commented, "We believe in the growth of trade between Turkey and Europe and U.N Ro-Ro’s important role in that development. We are very interested in the Turkish market and believe that private equity can play a helpful role by investing to support the growth of businesses. This is our first investment here, and we hope to find other investment opportunities in the future."

On one hand, this type of deal with a large private equity player coming to Turkey was inevitable. The economy is still holding on, the elections are over, and Southeastern Europe funds have been circling around Turkey for quite some time now. The Forbes article makes an interesting comment concerning the increased desire for private equity deals in emerging markets due the "lack of appetite for credit to finance more expensive acquisitions in developed markets."

On the other hand, Golden tier US funds are currently on the fence and gaming to set up new offices or affiliates in Europe. For example, DFJ has bought a stake in European Esprit Capital Partners and has also just launched a VC fund in Russia. In addition, AIG has made motions and new hires to launch back into Turkey (more on that later). It seems even with the bubble bursting 7 years ago in the US, and with different cultures between US and European private equity deals, the US funds are willing to give it another go. It should be interesting to see if Europeans are still open to the idea and which firm will be next.

But for Turkey, this large scale private equity deal should send signals to other large international players and make them take note. The advantage will remain with those firms (both legal and consulting) on the ground in Turkey that have the resources to spot and get the deals, not to mention the large Turkish firms with buyout potential.

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Posted @ 21:11   2 Comments

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