Fluctuations in the global economy and increasing domestic political risks are forcing Turkish investors to think twice when making investment decisions. However, studies indicate that although predictability has diminished in this period, the Turkish businesses still have an appetite for expanding in foreign markets as part of their strategic targets
Experts say that although there might be issues such as slow growth, pressure on profitability and restrictions in access to financing, Turkish companies will likely follow strategic investment opportunities abroad to the extent of their financial capacity in the period ahead. In its recent “Turkish Outbound M&A Review 2016”, international consulting company Deloitte offers a general overview of mergers and acquisitions of Turkish companies abroad. According to the report, 42 such deals took place in 2016 and the total volume of M&A deals was about US$2.3 billion. Deloitte data show that although deal numbers are about the same as in previous years, the total volume was the lowest in the past five years. Despite that, the outbound deal volume of Turkish investors in the last decade totalled US$26.3 billion through 292 transactions.
Yıldırım Holding strikes biggest deal
According to the report, while mid-sized companies drove the total deal number, large holdings — such as the Doğuş Group, Global Liman İşletmeleri, Yıldırım Holding and MNG Holding — through acquisitions in restaurants & hospitality, infrastructure, and mining, maintained their pattern of regular acquisitions over the last years and together hosted almost half of the total number of outbound deals. In most cases, the stakes acquired by the investors were either 100 percent or majority stakes.
Yıldırım Holding’s acquisition of the Puerto Bolivar Harbor for US$750 million was the largest deal of the year; amounting to 33 percent of the total M&A volume in 2016. The total deal volume, which was US$159 million in 2014 and US1$00 million in 2015, was US$55 million in 2016. Transactions with a value below US$20 million represented more than half of the overall deal number.
Europe — most attractive destination
In 2016, Euro-zone maintained its dominance among target markets through 32 deals with a total deal value of US$1.2 billion. This was followed by North America with five deals.
On a country basis, Italy, Germany and Spain were the most active destinations for Turkish investors. On the other hand, new frontiers such as Bangladesh, Burkina Faso and Ecuador appeared for the first time on the list of Turkish M&As in 2016. Infrastructure, restaurants & hospitality and manufacturing were the top three sectors both in terms of deal value and deal number, and together hosted 83% and 52% of the total annual deal volume and the total deal number, respectively.
Most attractive sectors for Turkish investors
Food & beverage, infrastructure, energy, real estate, and manufacturing had been the most targeted sectors by Turkish companies in other geographies in the last decade. Similar to previous years, Doğuş Group demonstrated strong interest in restaurants & hospitality sector and sealed the overall number of deals (eight) in this sector. On the other hand, MNG Holding pursued strategic opportunities overseas and realized three deals in mining with a certain focus on Africa. Turkish investors’ acquisitions overseas also exhibited certain regional patterns. For example, the Mediterranean region was attractive in M&As of ports and tourism facilities; Africa and Canada in mining deals, and East and Central Europe and Asia in manufacturing.
