Middle East’s largest PE firm wagers on Turkey despite political chaos
Dubai-based Abraaq Group, the largest private equity firm in the Middle East according to Private Equity International, is planning to ramp up investment in Turkey following a failed coup in an effort to profit from any potential rebounds. The firm already has a $526 million fund dedicated to Turkey and seven investments, which Abraaq’s head says will no be exited any time soon. Abraaq, one of the largest investors in emerging markets, manages approximately $9.5 billion in assets, their website says.
The move provides yet another example of how Gulf investors are less adverse to political volatility in Arab nations compared to their Western counterparts. In Egypt, where similar political turmoil has been ongoing for years, investment from the Gulf continues to flood in.
Abraaj Group Ltd., one of the largest private-equity investors in developing markets, plans to make as many as five purchases in Turkey over the next two years as it prepares for the country’s rebound from a failed coup.
Abraaj, which raised $526 million for a fund dedicated to investments in the country, is in talks with the owners of three “well-managed, high-quality businesses,” said Selcuk Yorgancioglu, the Dubai-based buyout firm’s head of Turkey and Central Asia. The companies operate in industries poised to benefit from growing domestic consumption, such as consumer goods and services, healthcare, financial services and logistics, he said.
The Abraaj Turkey Fund I raised more than the $500 million targeted after an extra $40 million was added for co-investments, Yorgancioglu said. This comes as President Recep Tayyip Erdogan has cracked down on opposition members in the wake of a coup attempt on July 15 that left nearly 300 people dead and after a series of terror attacks in the past year that killed more than 250 people.
“Political volatility is not affecting our transactions,” Yorgancioglu said. “We expect the country to normalize much more quickly than many other people think. During this period we are continuing negotiations on the transactions we currently have in our pipeline.”
Abraaj, which has about $10 billion under management globally with investments in more than 30 countries, has invested more than $900 million into 11 companies in Turkey over the past decade. The new fund has already bought a 25 percent stake in Turkey’s largest e-commerce platform, Hepsiburada.com, and almost 10 percent stake in Fibabanka AS, a lender owned by billionaire Husnu Ozyegin.
About 70 percent of contributions to the fund came from investors in Europe and North America, with institutional investors and sovereign wealth funds accounting for 78 percent of the committed capital, Abraaj said in a statement on Tuesday.
The firm, which has exited investments worth $800 million in Turkey, has no immediate plans to divest any of its seven investments in Turkey, Yorgancioglu said.
“Our portfolio is very young,” he said. “We don’t go into deals that have been shopped around to too many investors.”