PRIVATE EQUITY

INVESTMENTS IN TURKEY

METIN AR
GARANTI SECURITIES
President and CEO

1
Agenda

p What is Private Equity ?

p Investment Areas and Criteria

p Advantages of Private Equity Financing

p Major Players in The Market and Investments

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What is Private Equity ?

p Private Equity Funds provide capital generally to

enterprises not quoted on a stock market.

p Partners are usually large institutional investors such as

pension funds, university endowments, insurance
companies and rich individuals.

p Private Equity Organizations as beign the shareholder of

the company, carry same business risks along with the
rest of the shareholders, therefore they expect high-return
in the long run.

p Investment period is usually 3 -5 years

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What Is Private Equity?

p Private Equity Funds provide financing as well as

continuous strategic support and advisory.

p Undertaking careful due diligence before making the

investment and retaining powerful oversight rights
afterwards is key for the protection of the fund

p A seat in the board of directors is required to monitor the

company’s strategic decisions

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Investment Areas
p Development/ Expansion Capital

p M&A Financing

p Family and Holding Company Transition

p Corporate Restructuring

p Secondary Stakes in undervalued publicly traded

companies

5
Investment Criteria

p Identifiable Competitive Advantage

p High Growth Potential

p Attractive Valuation Relative to Potential

p Well Defined Exit Alternatives

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Exit Options
pInitial Public Offering

pStrategic Sale

pFinancial Sale

pSale to Owner/Manager

7
Advantages of a Private Equity Financing
p Additional management expertise

p Financing expertise and strategic support

p Confidentiality

p Independence of the capital markets volatility

p Bridge financing to a future succesful IPO

8
Private Equity Investments in Turkey

p Unexploited Immature Private Equity Market : Private Equity

is a relatively new phenomenon for Turkey, unlike other
emerging markets such as Greece and Poland. Total Private
Equity investment in 1999 in the US was $95.5 billion, in Europe
Euro25,1 billion, in Greece US $ 500.
However in Turkey aggregated private equity investments
since early 90’s is not more than $100 million.

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Major Players in Private Equity Market
p AIG
p Anatolia Capital Partners
p Bank of America/Caisse /ADIA
p Citicorp
p Commercial Bank of Greece
p EMEA
p Merrill Lynch
p Nomura
p Safran

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 Some Private Equity Investments in
Turkey

Name Initial Float % IPO Comments

Investment IPO Date Value
Arat Tekstil US$ 2m. 34.4 %, 1997 US$ 7.4 m Exited after 18
months
Unal Tarim US$ 2 m. 40.8%, 1997 US$ 5m Exited after 18
months
GSD Holding US$ 7.5 m. 5.8%, 1999 US$ 4.1 m Not exited

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 Some Private Equity Investments in
Turkey

Name Initial Float % IPO Comments

Investment IPO Date Value
Biomar US$ 1m. Strategic Sale
Planned
Rant Leasing US$ 2m. 25%, 1995 US$ 1.7m Exited via SPO

Eka Elektronik US$ 2m. IPO planned

Aba Ambalaj US$ 6m. Write-Off

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Some Private Equity Investments in Turkey
BIM
p ML Invested in BIM
supermarket chain with a
15% stake in 1999, later
joined by Bank of America
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TERMOTEKNIK
p ML purchased 40% of the
company in 1997
p Termoteknik used the
fund to restructure its
financial position
p The investment is exited
through a strategic sale to
a British Group
Some Private Equity Investments in Turkey
p In 1999 Safran purchased
initially 10.99% stake in
Jumbo Madeni Esya A.S.,
a cutlery manufacturer .
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p Safran Invested in Alfa
Securities, a local
brokerage house in 1998
p Alfa Securities had an
IPO, floating 16% for
US$ 2 m.
p Safran did not exit at the
IPO
Some Private Equity Investments in Turkey

p In 2000, AIG closed a deal p AIG Invested also in

with Galatasaray Football AFM movie theatre
Club paying $21 million chains.
for a 20% stake.

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Some Private Equity Investments in Turkey

p EMEA invested in Probil , p EMEA bought 51% of

an Internet Technology Gorbon Isil, specialised
company in 1999 in various fields of
ceramic arts, for US$ 1.8
million in 2000.

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Other Investments
p Citicorp invested in 7.33% of Merko Gida, a producer of
tomato paste in 1999 for $2.4 million $US

p Commercial Bank Of Greece bought a US$ 10 million

stake in Isiklar Ambalaj, cement sack producer.

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