Light at the end of the tunnel – Infrastructure Turkey (M&A)

                                                  Version française : La lumière au bout du tunnel - L'infrastructure Turquie (M&A)

Infrastructure investments = M&A opportunities in Turkey?

Excluding energy & telecom industries, infrastructure investments in Turkey are expected to reach USD700bn for the next decade.  Majority of this amount will be channeled to urban development in order to rebuild 6.5m residential units that face earthquake risk.

Transportation will remain as the second investment focus in terms of value, consisting 35% of the total infrastructure investments. Other specific projects such as Health campuses, Canal Istanbul, 2020 Olympics are also on the investment agenda, bringing along new business opportunities. Given that, M&A activity in Turkey is expected to peak as it represents substantial investment opportunities not only in infrastructure but also in many related industries.

First of all, construction activity will gradually rise as urban development projects will largely be undertaken by the private sector. Moreover, Istanbul Finance Centre (IFC) project will have a positive impact on the financial services industry.

With this project, it is aimed to develop Istanbul into a regional finance hub while taking advantage of its geographical position and solid banking sector of the country. Consequently, financial services and construction sectors in Turkey are expected to be in the radar of the investors for the next years which may also increase related M&A deals.

Safe-haven government bonds versus Infrastructure

Considering Eurozone crisis coupled with the fall in yields on safe-haven government bonds, infrastructure sector in Turkey seemed an attractive option among investors focused on assets with stable cash flow. Turkey’s robust foreign trade fuelled by high GDP growth rates attracted many international investors including government-backed funds.

French Inframinervois’ investment in Iskenderun Port, Kumport investment by Ministry of Finance-Oman and Italian VEI Capital’s stake acquisition in Global Liman have been remarkable M&A deals in Turkish infrastructure sector.

Besides, transportation investments (of c. USD250bn) also foreshadow an increase in related M&A activity as the project aims to connect the underdeveloped Anatolian hinterland to coastal hubs. Realization of this project may boost both domestic and foreign trade in the area while resulting in higher cash flows.

Consequently, cost-efficiency in exports and growing dynamism in the region will definitely whet the appetite of strategic investors that seek geographical diversification. Furthermore, private equity and venture capital funds are also expected to seize the undiscovered opportunities in Anatolia, as the region has remained isolated from foreign investments mainly due to infrastructure problems.

Edit: As of May 2013, two important infrastructure projects have found their investors. Firstly, Turkish consortium Limak-Cengiz-Kolin-Mapa-Kalyon OGG has won the tender for 25-year build-operate-transfer (BOT) contract for İstanbul's third airport with 22.1 billion euros bid. 

Secondly, Doguş Holding won Galataport tender as it bid $702m for the right to develop and operate the port area for 30 years.

Even the above-mentioned projects will significantly ameliorate related industries, many other projects will ensue as there are still numerous projects available for prospective investors. 

In conclusion, about USD70bn  investment per year on infrastructure for the next decade can be considered as a sign of a breakthrough in overall Turkish M&A activity and it may be the light at the end of the tunnel for investors recovering in the post-crisis period.

Melih Ardalı

For further information: mergerturkey@gmail.com

Tweets by @merger_turkey

Le secteur de la santé turc attire beaucoup des investisseurs étrangers

Click for English version : Healthcare M&A Activity in Turkey

Le marché de fusions acquisitions dans le secteur de la santé turc

Le marché de la santé en Turquie est devenu très attractif pour les investisseurs étrangers ces dernières années.

Les investissements du gouvernement turc en vertu du programme de transformation de la santé ont joué un rôle important dans le positionnement de Turquie en tant qu’une destination d'investissement privilégiée pour le secteur de la santé.

Le marché de la santé en Turquie s’élevait à 21 milliards de dollars en 2011 et il devrait croître à un taux de croissance annuel composé de près de 9% grâce à sa taille de la population et du taux de consommation faible ainsi que l'accès croissant au financement et à l'expansion du secteur privé.

Fusions acquisitions transfrontalières dans le secteur de la santé 

Le secteur de la santé turc a attiré d'importants investissements étrangers depuis 2010. Ces investissements proviennent en particulier de l'Allemagne et de la Suède.  D'autre part, l'acquisition d’Acibadem Saglik Hizmetleri par le géant malasien de la santé IHH, pour un montant de 1, 260 milliards de dollars avaient été l'une des opérations les plus importantes en termes de valeur. De même, l'acquisition de Mustafa Nevzat İlaç par la société américaine Amgen était une opération remarquable pour le sous-secteur pharmaceutique.

Le secteur pharmaceutique turc peut être considéré comme un marché déjà dominé par des entreprises étrangères. Cela est du essentiellement à la mise en place d’importantes bases de production internationales qui bénéficient du positionnement géographique de la Turquie.

En outre, la majorité des entreprises turques ont été acquises par des acteurs mondiaux en raison de ressources humaines hautement qualifiées dans la production et la gestion, ainsi que le marché insaturé avec un potentiel de croissance élevé. Pourtant, il ya encore des opportunités à considerer. En plus des investissements stratégiques, les investisseurs financiers ont également été très intéressés par le secteur de la santé turc.

L’activité de fonds d’investissement étrangers*

*les transactions transfrontalières dans le secteur de la santé depuis 2010.

En ce qui concerne les investissements financiers, les fonds de capital-investissement britanniques ont été les investisseurs les plus actifs étrangers suivis par le Koweït en termes de volume de transaction. 

En plus de l'amélioration des indicateurs démographiques, la main-d'œuvre qualifiée et l’augmentation progressive de l'espérance de vie ont attiré leur intérêt pour le marché de la santé en Turquie. En outre, les sorties de fonds d'investissement également montrent le potentiel de marché de la santé dans ce pays.

Par ailleurs, la vente secondaire des hôpitaux d’Acibadem par Abraaj Capital et la sortie de Marfin Investment Group de son investissement sur Şafak hôpital ont été des signes positifs sur le marché car ces opérations ont été jugées rentables pour les deux parties.

En somme, la croissance durable de l'économie turque va continuer à aiguiser l'appétit des investisseurs financiers et stratégiques et cela va mener à l’augmentation des fusions acquisitions en Turquie ainsi qu’à la croissance du marché mondial de la santé dans les années à venir.

Melih Ardalı

Pour plus d'informations : mergerturkey@gmail.com

Tweets de @mergerturkey

Turkish Healthcare Market attracts foreign investors

                                                                                                                  

Version française : Fusions acquisitions - Le secteur de la santé en Turquie

Healthcare M&A Activity in Turkey 

The promising Turkish healthcare market has become a hot spot for foreign investors in recent years. Government investments under health transformation programme leading to hospital modernization as well as the consolidation of middle class and high disease burden played an important role in positioning the country as a strong investment destination for healthcare.

 Having an industry of over $21 billion in 2011, the total healthcare market in Turkey is expected to grow at a CAGR of around 9% due to the size of the population and current low consumption rate along with increasing access to funding and private sector expansion.

Cross-border Healthcare M&A in Turkey 

Remarkable Cross-border deals since 2010

 Turkish healthcare market has seen significant foreign investments since 2010 particularly from Germany and Sweden, resulting in high level of deal activity with domestic acquisitions. On the other hand, the acquisition of Acıbadem Sağlık Hizmetleri by Malaysian healthcare giant IHH for $1,260 billion had been one of the most important deals in terms of deal value.

Likewise, American pharmaceutical company Amgen’s acquisition of Mustafa Nevzat İlaç has been a remarkable M&A transaction in pharmaceutical sub-sector. Turkish pharmaceutical sector may be considered already foreign dominant market due to the establishment of international production bases in the country to benefit from Turkey’s geographical position.

 Moreover, majority of the domestic firms were acquired by global players owing to highly skilled human resources in production and management as well as the unsaturated domestic market with high growth potential. Yet there are still available opportunities worth considering. In addition to remarkable strategic investments in this sector, financial investors has also been highly interested in healthcare.

 International Private Equity Activity* 

*completed cross-border deals in healthcare since 2010

Regarding financial investments, UK private equity funds were the most active foreign investors followed by Kuwait in terms of deal volume. On top of population growth and improving demographic indicators, skilled workforce and a gradual rise in life expectancy attracted their interest in Turkish healthcare market.

Moreover, significant private equity exits in the sector also demonstrate the high potential of Turkish healthcare market. For instance, Abraaj Capital’s secondary sale of Acıbadem Hospital and Marfin Investment Group’s exit of Şafak Hospital are important signs for opportunities in the market as those transactions were considered profitable for both sides.

To sum up, sustaining growth of the Turkish economy in the post-crisis period will continue to whet the appetite of both financial and strategic investors, leading increasing healthcare M&A in Turkey and global market growth in the forthcoming years.

Melih Ardalı

For further information: mergerturkey@gmail.com Tweets by @merger_turkey