| Conflicting Reports on Turkey's Economic Slowdown in 2008: Ernst & Young, Iş Private Equity, Deloitte Touche Turkey |
| 28 July 2008 |
Ernst & Young Says Shopping Center Boom is Over!
This last May, Ernst&Young Turkey's managing director Osman Dinçbaş came out and said that Istanbul had reached the famous number of 100 shopping centers: a number that was predicted to meet Istanbul's demand. He even went on the say, "Taking those under construction into account, the number of malls will rise above 100. Can the city handle such a number? I believe a crisis in our country will stem from this."
Interesting perspective in this article, but having lived in this city, I'm sorry, but I kind of have to disagree. Very cautious. While there still might occur a crisis in Turkey, this will be a result of other issues. Decline of retail receipts will only occur after the fact. Maybe he should visit Carrefour on a Saturday afternoon? Compared to Europe, Turkey is still well below the number of square meters/population. I wrote about some of this last year: The Shopping Center Boom in Turkey
 Iş Private Equity Sees Continued Inflow and Strong Growth
Also printed in May of this year in the TDN: İş Private Equity forecasts growth
Private equity funds investing in Turkish firms will continue to grow and yield strong returns in 2008, Murat Özgen, chief executive officer of İş Private Equity "The current year will be another bullish year for private equity in Turkey and will follow the footsteps of 2006 and 2007," Özgen said. "We will see couple of mega funds entering the market and doing buy-outs.
Although he is somewhat bullish about the year, he still admits that granting bank loans and finding leverage might be difficult. I guess the question remains that eventhough private equity is cyclical and may have problems in the short-run, if there is a crisis on the horizon from global causes, how short will it be and when will it come? Can Turkey weather the storm?
Deloitte Touche Turkey Releases Private Equity Confidence Survey for 1st Half 2008
This just out in the TDN: Investor confidence declines, says Deloitte
According to the survey, "Some 75 percent of investors who participated in the survey expect the overall economic climate to continue its decline, and none foresee an improvement. Only 25 percent of private equity investors that participated in the survey believe the overall climate will remain unchanged, the report showed. That figure stood at 55 percent in Deloitte Turkey's previous survey six months ago."
Interestingly enough, according to the report, the overall view is that deal volumes will remain about the same, but that transaction multiples will be lower.
For a full read on this free report, visit:
Deloitte Turkey Report page, or
Download it here: (PDF)
Private Equity Confidence Survey (PECS): Survey for the 1st half of 2008
Deloitte puts out some pretty amazing reads, and this is no different. So, coupled with Turkey's political turmoils, and the global slowdown, Turkey will be hard pressed to get ahead this year.
Labels: Deloitte Touche, Ernst Young, Investment Reports, Is Private Equity, Shopping Centers
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| Deloitte Touche Turkiye Publishes Most Comprehensive Turkish Private Equity and Venture Capital Reports - 2007 |
| 11 November 2007 |
A few people were looking for the link to this report on my freind Kutlu's blog on Entrepreneurship. So, for anyone curious about testing the waters of the PE/VC space in Turkey, the Deloitte Touche Turkiye report on Private Equity in Turkey (PDF) is a must-read. With the Turkish Venture Capital Association being non-existant (the last analysis being written in 2004), and TUSIAD being focused in other areas, this report from Deloitte Corporate Finance is the most comprehensive analysis to date. Originally I found this report on the Turkish US Business Council website (with some other good reports), but here is the real home link at DT:
The report is structured around various economical periods in the last 20 years dealing with crises as well as telling of various fundraisings, deals and exits. It is a white paper of course, so the conclusion leaves the reader with information how to contact Deloitte Corporate Finace Turkey for their consulting and M&A requirements.
One cannot argue with the appendix. It is a timeline of all deals and a valuable resource. However, as mentioned in the report, some deals and their values are estimates only and should be taken with a grain of salt. In addition, there is a feeling that data collected comes only from personal experiences and local speculators with contacts in the deals themselves. I also believe that a few academics were involved on the consulting work for this report. Once again, I will reiterate that it is a shame that the TVCA has not produced anything that resembles this study.
Deloitte should be applauded for this work. Furthermore, while I provide the link for this report, I feel that I should also provide links to two other fine DT reports of noteworthy respect.
Enjoy!
 Technorati Tags: Venture Capital, Reporting, Deal Flow, Turkey, entrepreneurship, Private Equity, Deloitte ToucheLabels: Deloitte Touche, Investment Reports, Private Equity, private equity research, Technology, Venture Capital
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| EVCA Releases Quarterly Report: Median Venture Investment Surpasses €3 million |
| 17 September 2007 |
At the end of August, the European Venture Capital Association produced its quarterly report with the help of Dow Jones, VentureOne, and Ernst & Young. The highlight of the report, published here by AltAssets, is that European venture capital investment reached €1.14bn in Q2 2007 despite a drop in deal flow to 213 in Q2 2007 from 223 in Q1 and 265 in the same period last year.
While great news for investors and entrepreneurs in Europe with a venture model coming of age, the real story should be next quarters results to understand if the markets and appetite for investments remained confident after the credit fluctuations in the US and abroad. Surely the investing of private equity funds in this stage of the cycle does not stop investors from investing funds in smart companies. As of yet, we still have not seen any stagnation in fundraising either. As well, what IRRs these funds will be gaining is another area of interest in the years to come.
But I think what is most striking about this report is that the median size of venture investment round has surpassed €3 million. Here is an excerpt from the report that is most telling about this:
'The European venture capital market saw an explosion in early-round investing as €600m was poured into 126 early stage deals,' said Jessica Canning, director of global research for Dow Jones VentureOne. 'The data shows the median amount invested in a first round during the quarter was €3.2m, by far the highest total on record. Add to that a continued interest in later stage deals and the overall median for a deal done in Europe jumped 41 per cent during the second quarter to a record €3.1m.'
'The record median round size in Europe this quarter is the continuation of a trend that we have observed over the last 18 months in which investors are providing greater sums to fewer companies, allowing those companies to better compete globally and build critical mass for an IPO or M&A,' added John De Yonge, research director for the Ernst & Young Global Venture Capital Advisory Group.
Buyout funds around the world are setting records in fundraising. For example; see how Carlyle has just closed its Carlyle Europe Partners III out at a cool $7 billion. While some VCs in Silicon Valley are even complaining that the VC model is broken, some even giving money back to LPs (Sevin Rosen), we have to pause and wonder "Where is the venture model going?" Research has proven that with increased fund sizes comes increased median investment sizes and increased valuations of investments whether inflated or not, and increaing acquisition prices. The decreasing number of investments could be considered direct support for the "Venture Capital Model is Broken" Theory, and is definitely cause for concern. We have all talked about the "Funding Gap" that exists between Seed and Incubation Investment and Series A. Are we reaching a stage where incubated companies will only have banks (or possibly angels) to turn to? What should fill this gap is the true venture model.
And for Turkey, firstly we should be concerned how much of the EVCA number includes Turkey if any. We should also be concerned about the outliers in the data that constitute venture. Secondly, since the Turkish government has pinned "so much" investment toward the building of incubator science and technoparks, we must ponder about our incubated companies who will simply not make the cut when looking for that venture financing. The foci of Turkish Venture Funds is still fairly traditional - technology (with some stipulations). And if the median investment round is to increase - what then? The funding gap has just gotten larger...
Finally, once again, I'm going to send a shout out to the Turkish Venture Capital Assocation (if there is one) that is actually registered with the EVCA, and challenge them, "Where is the data?" I'm willing to work with you here. Would someone at the EVCA give them a call, please? Maybe the fault does not lie with the TVCA, but rather the reluctance of Turkish VCs toward paying dues and continuing the work of the TVCA! If you want to set the record straight on this, I urge the TVCA, the EVCA or any Turkish VC to contact this site, or comment below.
Technorati Tags: Venture Capital, EVCA, TVCA, Quarterly Report, Deal Flow, Turkey, entrepreneurship, Incubation, innovation, Funding Gap, incubator, VCLabels: EVCA, Funding Gap, fundraising, Incubators, Investment Reports, Median Investments, Private Equity, private equity research, TVCA
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Publisher: Jon H. Black
