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.

Turkey Launches iVCi - The Istanbul Venture Capital Initiative - a €200M Fund-of-Funds Aided by the EIF
Well, I finally get to break the news on this one since I only received the press release a few weeks ago. It is also fitting as it is Grandstanding Traction's first post of 2008. It should be a great year. The press release reads as follows:

The European Investment Fund (EIF), together with the Technology Foundation of Turkey (TTGV), the SME Development Organisation of Turkey (KOSGEB) and the public Development Bank of Turkey (TKB) are jointly launching a target EUR 200m dedicated fund of funds and co-investment programme in Turkey. The Istanbul Venture Capital Initiative, or “iVCi” as the programme is known, aims to serve as a catalyst for the development of the private equity industry in this country whilst achieving good returns for its investors. iVCi is to be advised by the EIF.

iVCi further consolidates EIF’s risk capital activities in Turkey, where it already has invested in Actera Partners and Turkish Private Equity Fund II. EIF's Chief Executive, Francis Carpenter, said: "we are extremely proud of supporting and being advisor to this pioneering initiative in Turkey. We have first class local partners and are confident that iVCi will accelerate the development of a sector which is key to the development of the Turkish economy."

Sahir Cortoglu, TTGV's Secretary General, added: "this fund is a crucial starting point for formation of a risk capital market and culture which we believe will further serve as a means of technology development in Turkey" To this, Mustafa Colakoglu, Vice President of KOSGEB further commented "iVCi allows us to deliver to SMEs in Turkey top quality finance to support them reaching global markets through what has been historically an under-developed asset class in this country."

TKB reflected on the importance of iVCi for the development of the domestic institutional investor base. Adbullah Çelik, Chairman of TKB said: "the majority of current institutional investors in Turkish private equity funds are foreign, iVCi provides a secure and sustainable environment for Turkish institutions, both public and private, to become involved as investors without hampering the corporate governance of the underlying funds." Currently, the majority of institutional investors in Turkish private equity funds are foreign based. iVCi shall provide access for its investors to the increasing number of Turkish private equity players. EIF is expected to invite a small select group of blue chip Turkish and international institutions to participate in this programme.

First closing of iVCi took place in Luxembourg on 13 November 2007 at EUR 150m. Official public launch is envisaged in the first quarter of 2008.
According to the AltAssets article on the iVCi release, the fund has a target of €200M. Also, according to Bankaciyiz - a Turkish bankers blog(in Turkish), the TKB will be contributing €10 million.

Hopefully, as this takes shape, we will see more venture capital partners and firms transpire in the area and finally grow this industry to fill the venture capital gap. It will be interesting to see what partners will take the reigns as well as what blue chip institutions will participate. I can't help but breathe a sigh of relief as this initiative gets started. I have always been somewhat negative as to the direction of the government in spurring innovation, more toward the universities and technoparks, and with the limited budgets that have been devoted, it has always been the case of very little funds locked up in bureaucratic steps. It was always the case of tax-free revenues that were suplemented by governement subsidies, which to me sounds like a company that could not survive in the real world. In addition, the universities somewhat lock incubated entrepreneurs up into "lifestyle" companies, and either continue to fund companies that should be cut loose, or maintain companies that should be growing at a greater pace if they had greater access to venture funds.

As an emerging market, Turkey made that choice of putting forward funds into univeristies and Technoparks, which isn't unwarrented given an economy that does not rely on its technology entrepreneurship. But in this case, Turkey can try to reinvent the wheel and sort of reverse engineer the process of spurring more innovation, entrepreneurship, greater job growth, growth of technology, value-add, and possibly even greater exports. Turkey is capable of creating world class companies. Again, as has been stated before on this blog, the education needs to begin. The TTGV and KOSGEB have all the tools to implement. Perhaps now it is up to univesity professors to refresh how they are training Turkey's entrepreneurs to access this capital.

Happy New Year Everyone!

[---+----+ Other Relevant News This Week +----+----]
Courtesy of the Turkish Daily News

Turkven Private Equity has acquired 70 percent of Provus Turkey and Provus Romania, the independent payment processor firm in Turkey and its operations in Romania for an undisclosed sum.

Buyers line up for Turk firms (Outlook for Foreign Mergers & Acquisitions in Turkey in 2008)

Turkey's Yildiz Holding has sold 60 percent of Fon Financial Leasing (FFK) to Kuwaiti-based Global Investment House KSCC (GIH), for $120 million.

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