Thursday, October 20, 2011

Do's and Dont's of Private Equity Dealmaking in Turkey

Earlier this week, I have had a first-hand experience of Turkey’s growing “center of gravity” among financial investors at a PE-focused event “Capital Impact 2011” organized by FT in London. I was the only senior advisor from Turkey that FT Business has invited to participate.
Some of the reasons for investors’s excitement include:

·         Turkey will be a trillion dollar economy by 2015.
 ·         From 2011 to 2013, the country’s privatization program will amount to about $50 billion, embracing the energy, banking, transportation, and telecom sectors.

·         The government is making plans to invest $100 billion in energy infrastructure over the next 20 years.

·         Sabanci Holding, my former company is only one of the two Turkish companies to make it to Boston Consulting Group’s list of Top 100 Global Challengers

China has become China by consistently growing the fastest in the world. However, unlike China, Turkey will prove to transform into a “China-like” growth democracy with better demographics and sustainable economy.

Building on all the excitement and growing interest, I’ve advised everyone to focus on six critical success factors:

1.    Need to be even more patient in Turkey. “Patient capital” will win in the end. 
2.    Know exactly what you will bring to the candidates – capital alone does not cut it anymore. Help them become “pretty” – build strong governance, enable IFRS reporting, fight bribery  & corruption etc. 
3.    Take a flexible and innovative approach to sourcing deals. Build and offer a local “multi-asset” strategy. Don’t always insist on majority or a minimum check size.  Sometimes you need to invest small to win big. 
4.    Be emphatetic to the local business community. First-generation business owners are in love with their firm more so than own children. What has gotten you successful globally may not get you too far in Turkey.
5.    Turkey is not just Istanbul. Can you count the top 10 cities that will deliver the biggest deals in the next five years? Which ones have you visited?
6.    Recruit local teams with ties to the community. Can’t cover it from abroad with credibility.

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