Private equity funds search for Turkish companies

Domestic and foreign investment funds are seeking companies to take in a partnership in Turkey. Turkey has increased its attractiveness for foreign investors, despite the global crisis as the OECDs highest growth market and only third in the world after China and Argentina in 2010. A new commercial code has been passed early this year to further improve corporate transparency and governance while making it easier for small to medium size firms to file for IPOs.

Private equity funds, which become partners to promising companies, have already revealed investments worth $283 million in 24 transactions in 2010.

The investment of these funds is expected to reach $3 billion by representing a 10-fold increase in 2011. A total of four acquisitions have already been completed in the first two months of the year. The first three transactions were made in the health, retail and food sectors. There are already many large PE firms operating in Turkey chasing big deals with equity checks of $150 million euros or less. It is interesting to note that more interesting PE investments have been realized so far by local PEs in the up to $50 million euro range.

The number of transactions and their volume are expected to increase this year, according to Demet Özdemir, a partner in Ernst & Young.

Turkey first met with private investment funds in 1995 and these firms have become an important contributor to the domestic market. The investment duration of these funds providing partnership by investing capital in companies varies between five to seven years, often with annual extensions.

But the biggest acquisition of last year was revealed by a Turkish investor. Esas Holding became a partner in AFM Theaters and Mars Entertainment Group by investing $82.4 million.