Analysis

Turkey: Emerging from the MIST

Source: CEE unquote | 28 Nov 2012
istanbul-turkey

Turkey's ideal location, strong GDP growth and comparably low public debt are just some of the factors raising interest in the country as an investment target. Anneken Tappe reports

Turkey is well established as an investment hotspot and interest from international investors continues to grow. Recently, Goldman Sachs' Jim O'Neill identified the country as one of the new rising stars of emerging markets dubbed MIST (Mexico, Indonesia, South Korea and Turkey).

"Private equity in Turkey has come a long way in terms of the presence of both GPs and advisers who understand the market," says Ahmet Faralyali, managing partner at Mediterra Capital.

Faralyali explains that Turkey's human capital is rich and provides a good base to educate the next generation of business leaders on both the buy and sell-side. Moreover, an economy with an impressive 8.5% GDP growth rate in 2011 desperately requires infrastructure investment to improve future growth capacity.

"Our government takes private equity very seriously and supports it as a part of its economic policies," Faralyali continues. Yet, the construct of a limited partnership is not provided for in Turkish legislation, which is why most Turkish funds are domiciled in other jurisdictions. However, increasing governmental support, including a recent proposal to enable investments from business angels, shows Ankara is willing to engage further.

On an international level, Turkey's outlook is improving as well. Fitch upgraded the country to investment grade status in November 2012 and public debt equates to just 38% of GDP – significantly less than most EU nations. In response to attention by investors, the Turkish lira has appreciated 5% against the US dollar since the beginning of 2012.

"Turkish GPs receive capital from two major groups," Faralyali continues. "Large equity cheques come from the big North American pension funds, and American and European funds-of-funds. Smaller commitments focused on the mid-market come from international financial institutions, like the EBRD."

But Turkey's largest trade partner and investor, the European Union, is more than underperforming at the moment. As the eurocrisis is blazing in the background, Turkey's GDP growth fell to 3% in 2012. Faralyali expects 2013 to be a better year, but he is aware of the threats: "If Europe is sick, it is impossible for Turkey not to feel it. We will probably see 3.5-4% GDP growth next year, while it would be 5-6% in a healthy global economy."

Turkey could be Europe's rising star, if Europe would just embrace it. Turkish prime minister Tayyip Erdogan has given the EU the deadline of 2023 to offer his country the accession to the Union. Otherwise, it would turn the other way, towards the Middle East.

Visitor Comments

 

Add your comment

We won't publish your address
By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication.

search unquote.com

Industry news

HIG credit arm appoints director

New hire joins from Banca IMI, where he was director

Southern Europe unquote

| 23 Oct 2014 | secure

KPMG promotes three

Two take over role previously carried out by Richard Clarke

UK unquote

| 23 Oct 2014 | secure

Balderton hires Debock as principal

Balderton hires Debock as principal

Balderton increases focus on France through appointment of Debock

France unquote

| 23 Oct 2014 | secure

Duff & Phelps recruits two MDs in London office

Newby and Mahalingham appointed to transfer pricing practice

UK unquote

| 23 Oct 2014 | secure

Updating your subscription status Loading

People

Nicolas Debock of Balderton Capital

Nicolas Debock, Balderton Capital

Balderton increases focus on France through appointment of Debock

More people news

Paul Skipworth of L Capital

Paul Skipworth to lead London office

More people news

Stephen Delaney of Bowmark Capital

Stephen Delaney, Bowmark Capital

New investment director Delaney previously Darwin Private Equity principal

More people news

Jake Warman of Sovereign Capital

Jake Warman, Sovereign Capital

Appointments follow firm's £395m fund close in August

More people news

Frederic Devos of Macquarie

Frédéric Devos, Macquarie Capital

New hire specialises in utilities and infrastructure

More people news

Events

event

unquote" Italia Private Equity Forum

Date: 12 Nov 2014
Location: Milan, Italy
event

Forum unquote” Italia sul Private Equity

Date: 12 Nov 2014
Location: Milan, Italy

Email Alerts