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Have Recent Events in Turkey Affected Turkey-Focused Private Equity Fundraising? – September 2013

by Stuart Hunter

  • 17 Sep 2013
  • PE

Following recent political discontent in Turkey, some LPs may be deterred from investing in private equity funds targeting the country. Preqin’s Funds in Market service shows that there are six Turkey-focused funds currently seeking to raise an aggregate of €757mn in capital commitments. This level of targeted capital falls significantly below the eight Turkey-focused funds that were in market at the same time last year, which were targeting an aggregate €1.9bn. So far, two out of the six funds in market targeting investments in the country have already held at least one interim close, collecting €59mn.

The majority of fund managers investing in the region are located in Turkey, with five fund managers aiming to raise an aggregate €500mn in capital commitments. This time last year, seven domestic fund managers were targeting approximately €1.9bn, demonstrating a significant drop in the level of capital being sought by domestic fund managers over the last year. The number of foreign-based fund managers has remained low, with only one GP exclusively targeting investment opportunities in Turkey. 

Breaking the six Turkey-focused vehicles in market down by strategy reveals that there are currently two growth funds in market seeking to raise a combined €245mn, while the remaining four funds are made up of buyout, early stage, fund of funds and natural resources. Currently, there is a more diverse range of fund types in comparison to the two different types this time last year. The eight funds in market last year were made up of five growth and three buyout funds, with buyout accounting for 64% of the total capital being sought.

The average size of the six funds in market focused on investment opportunities in Turkey is €126mn, with the largest fund in market, Turkish Growth and Innovation Fund of Funds, aiming to raise €250mn in capital commitments. The fund is managed by Luxembourg-based European Investment Fund and seeks to stimulate growth and innovation in Turkey. An example of a significant fund targeting Turkey as part of a wider geographical focus is Clean Energy Transition Fund, which is seeking to raise €200mn. The infrastructure fund has reported one interim close to date, on €65mn, and is primarily seeking investment opportunities in hydro, wind, geothermal, biomass, and solar power generation assets.

So far in 2013, Mediterra Capital Partners I remains the only predominantly Turkey-focused fund to have closed, reaching a final close of $213mn (€159mn). The fund is Istanbul-based Mediterra Capital’s first fund and focuses solely on mid-market companies. Although appetite for investment opportunities within the region appears to remain consistent in the face of political instability, fundraising levels still have some catching up to do in comparison to the four exclusively Turkey-focused funds closed in 2012, which raised a total of €1.7bn in capital commitments.

 

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