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Carlyle eyes deals in Turkey

Dubai, July 27, 2010

The Carlyle Group is taking aim at deals in Turkey, attracted by the country's increasing business focus on the Middle East and Asia, an executive from the private equity firm said.

Washington, DC-based Carlyle has nearly $90 billion under management and has been one of the few firms carrying out deals in the wider Middle East region, where private equity activity has grown scarce since the global financial crisis.

"We are looking at manufacturing and retail. We have flexibility in which sector we invest. We'll possibly have a deal this year in Turkey or around the first quarter of next year - more likely next year," Walid Musallam, Carlyle managing director and head of its Middle East and North Africa team, said in an interview conducted on Monday.

Carlyle acquired a 40-per cent stake in Medical Park, Turkey's second-largest healthcare services company, at the end of 2009. In March, it bought a 30-per cent stake in Saudi Arabia's General Lighting Company, the kingdom's largest lighting fixture manufacturer.

Middle East private equity investments slowed to just $561 million in 2009 from $2.72 billion in 2008, a recent report from the Gulf Venture Capital Association showed.

Carlyle's Musallam expects regional private equity activity to pick up again in 2011, joining a number of executives calling for Saudi Arabia and Turkey to lead the rebound.

"The economy is doing well and Turkey's public equity market has rebounded strongly which has a positive effect on our activity as owners of companies start looking at bringing in investors, which they typically avoid when the economy is not doing well and valuations are suppressed," said Musallam.

Turkey's economy is expected to grow by around six per cent this year, rebounding from a contraction of nearly 5 per cent in 2009 which ended a spectacular decade of growth.

Turkey turning east

Carlyle earlier said Saudi Arabia was a top priority but it has also identified Turkey for growth, as the latter's economic sphere of influence is gradually shifting from Europe to the East, creating opportunities for Turkish firms wanting to expand regionally.

"Turkey is expanding its business focus beyond Europe and into the Middle East and Asia," Musallam said.

At the crossroads between Europe and Asia, Turkey mostly relies on Europe for its exports. But recently the country has turned to countries such as Syria and even Iran in a bid to play a prominent political role in the region.

Turkey sent 20 per cent of its exports to the Middle East in 2009, compared with 12.5 per cent in 2004.

"There are the family-owned businesses but you have all sorts of entrepreneurs who have built up companies over the years," Musallam said.

"They are at a point where they either continue as a family-owned business with a new generation of owners or they start institutionalising in preparation for going public and bringing in a partner that can help them do so."

Carlyle in the region is typically interested in pursuing minority deals and has a "sweet spot" of $50 million to $150 million in equity size, Musallam said.

It still has some resources left from a $500 million fund it closed in March 2009. – Reuters




Tags: Dubai | Turkey | Carlyle | Washington | Medical park |

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