Turkey-Focused Private Equity Fundraising Continues to Struggle – November 2015

by Luke Goldsmith

  • 13 Nov 2015
  • PE

In 2012, the amount of capital raised by Turkey-focused private equity fundraising had reached a record high, collecting an aggregate €1.8bn from five funds. However, fundraising has since slowed. There were no Turkey-focused funds raised in 2014, owing to a lack of confidence in the Turkish market, with political instability and the declining Lira deterring investors. Private equity firms are struggling to exit deals due to this fall in currency.

The largest Turkey-focused private equity fund raised since 2007 is Actera Partners II, which reached a final close on just under $1.1bn in 2012. Actera Group pursues investment opportunities across a wide range of industries, both in established and emerging companies focusing on growth capital and buyout situations. This second fund follows the firm’s maiden vehicle, which reached a final close of €475mn in 2007, making it the third largest fund raised since 2007.

So far this year, fundraising has been only gradually improving, as just three Turkey-focused funds have reached a final close. However, there are 10 funds currently in market – a good sign for Turkish businesses. Three of these funds have reached a first close, including a Turkey-focused vehicle managed by The Abraaj Group, the emerging markets investor’s first fund with a specific focus on investments in Turkey. The fund is looking to raise $500mn and reached its first close earlier this year.

If it were to meet its target, the Abraaj Group’s fund would be the only fund currently in market that would place in the top five funds closed from 2007 onwards. This is evidence of private equity firms seeking smaller deals in Turkey, where more opportunities lie. With fewer options at the higher end of the Turkish deal landscape, larger private equity players are less willing to make deals; there are exceptions, however, such as the $2.1bn investment by TPG Capital in Turkish spirits group Mey Içki back in 2011.

Despite the rarity of large deals in Turkey, positive signs may be on the horizon. The Turkish Commercial Code, which came in to effect in 2012, gives foreign investors the same rights as local investors, a possible reason why firms such as The Abraaj Group and 500 Startups are raising Turkey-focused vehicles. As a result, Turkey-focused fundraising figures may begin to rise.

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