| 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."
Labels: Mavi Jeans, Turkven
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Well call me optimistic but I believe this slowdown can be good for some PE investors (especially Turkven) in the long run. Here are several reasons why:
1) OK the leverage might be very tight but how many mega buyouts take place in Turkish market anyway?
2) When the going gets tough the valuations would probably ease to more reasonable levels. Most of the companies will need financing so if you have a longer term horizon wouldn’t you rather invest with "your terms" right now than later. I guess Turkven raised the second fund in 06 so they still have a good investment period in front of them. (Buffet quote: “Be Fearful When Everbody is Greedy and be Greedy, When Everybody is Fearful.”)
3) Whenever there is this sort of crisis, international players flee leaving more ground for local players. (Read: with oil at$45, I don’t think gulf based players will be as aggressive as they were).
4) Who does have a local fund the size of TurkVen? and to those who say Aktera the next question is who does have a team as ready and with the deal experience of Turkven's?
5) Maybe not tomorrow but when the economy recovers the exits will be much more favorable. (When international players return secondaries will be much more abundant and who knows maybe we will even see some PE backed IPOs).
6) The most significant risk I see is the currency risk and although it seems like we are in a deflationary environment at the moment, with governments spending like drunken sailors and printing money like crazy I don’t think we’ll see very strong US$ or Euro in the long run.
Apart from the macro picture, there seems to be a pattern developing in TurkVen investments which is interesting to note. Look at UNO, Tekin Acar, Mavi Jeans. If you are in consumer products, if you have a brand name and good market share than they are interested in you. Several companies with similar criteria: Gilan (jewelry), Zeki Triko (swimwear), Sarar (business wear), Penti (hoisery) (you got the idea).
Without knowing the specifics of the deal here is my take: I remember reading news about this deal quite some time ago. So I assume a very lengthy negotiation process took place and Turkven is covered. Probably they won’t be a $1B company as stated in the press release, but with Mavi’s brand and distribution channel, as long as they keep positive cash flow growing they can re-lever and get some return on the investment when the credit markets ease. I would be more worried about Tekin Acar investment with Sephora trying to nibble market share than Mavi.
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Publisher: Jon H. Black
Well call me optimistic but I believe this slowdown can be good for some PE investors (especially Turkven) in the long run. Here are several reasons why:
1) OK the leverage might be very tight but how many mega buyouts take place in Turkish market anyway?
2) When the going gets tough the valuations would probably ease to more reasonable levels. Most of the companies will need financing so if you have a longer term horizon wouldn’t you rather invest with "your terms" right now than later. I guess Turkven raised the second fund in 06 so they still have a good investment period in front of them. (Buffet quote: “Be Fearful When Everbody is Greedy and be Greedy, When Everybody is Fearful.”)
3) Whenever there is this sort of crisis, international players flee leaving more ground for local players. (Read: with oil at$45, I don’t think gulf based players will be as aggressive as they were).
4) Who does have a local fund the size of TurkVen? and to those who say Aktera the next question is who does have a team as ready and with the deal experience of Turkven's?
5) Maybe not tomorrow but when the economy recovers the exits will be much more favorable. (When international players return secondaries will be much more abundant and who knows maybe we will even see some PE backed IPOs).
6) The most significant risk I see is the currency risk and although it seems like we are in a deflationary environment at the moment, with governments spending like drunken sailors and printing money like crazy I don’t think we’ll see very strong US$ or Euro in the long run.
Apart from the macro picture, there seems to be a pattern developing in TurkVen investments which is interesting to note. Look at UNO, Tekin Acar, Mavi Jeans. If you are in consumer products, if you have a brand name and good market share than they are interested in you. Several companies with similar criteria: Gilan (jewelry), Zeki Triko (swimwear), Sarar (business wear), Penti (hoisery) (you got the idea).
Without knowing the specifics of the deal here is my take: I remember reading news about this deal quite some time ago. So I assume a very lengthy negotiation process took place and Turkven is covered. Probably they won’t be a $1B company as stated in the press release, but with Mavi’s brand and distribution channel, as long as they keep positive cash flow growing they can re-lever and get some return on the investment when the credit markets ease. I would be more worried about Tekin Acar investment with Sephora trying to nibble market share than Mavi.