New wave of foreign investments to make splash in Turkey

Turkey could see a wave of foreign direct investment from 70 international companies seeking growth and profitability in the wake of the global recession in the next year, according to Turkish-language magazine Capital.

These investments may total $12.5 billion, the magazine reported, quoting a recent report by BCG Partners.

Turkey saw $8.9 billion in FDI last year.

According to the report, 80 percent of this FDI is expected to come from greenfield investments and merger and acquisition transactions.

While the share of greenfield investments among foreign capital inflows did not exceed 20 percent in previous years, this figure is expected to reach 40 percent in 2011.

Mergers and acquisitions in the Turkish market are expected to exceed $30 billion this year. "With a healthy privatization process, we forecast the volume of mergers and acquisitions to exceed $30 billion," Kerim Kotan, managing director at Pragma Corporate Finance, told Capital.

Some of these nearly 70 investors are ready to enter the domestic market while others are seeking partnerships and still others are observing the market.


The retail, energy, medicine and food sectors are forecast to drive a large portion of these investments.

A great number of brands planning to enter the Turkish market via shopping centers opening within the next year will power the growing retail sector.

Abercrombie & Fitch, Hollister, Victoria’s Secret, Mexican brand KidZania, Scotch$Soda from the Netherlands, Spain’s Springfield and Cortefiel, Portuguese Sport Zone and Zippy are only some of the retail brands seeking Turkish opportunities.

According to Başak Vardar, corporate finance partner at Deloitte Turkey, “Potential in the domestic market, growth in various sectors, strong labor force and nearby markets have helped the Turkish market become prominent.”


Companies that postponed their investment decisions due to shrinking markets and financial difficulties during the global recession have begun to revive their plans, said Müşfik Cantekinler, the institutional financing department chief of Ernst & Young. "There is a great increase in the number of customers directed from our abroad offices."

In addition to interest from European firms, companies from the Middle East and Far East are showing great interest in investing in Turkey too, experts agreed. "Europe’s strong companies choose Turkey to grow in. But we also observe that investors coming from Gulf countries and Far East countries such as China, India and South Korea are more active," Cantekinler said.

French international retail group Auchan and entertainment retail chain Fnac, the U.K.-based Hard Rock Café, the Netherlands’ Spar and Euronics are some of the companies included in the BCG Partners list. German Roller Markt, Italian Lafano and Austria’s Lutz are among of the furniture companies planning to enter the market this year. Energy companies such as Indian Oil Corp., Mexican Pemex and American Valero Energy are also seeking opportunities.

In addition to companies ready to enter, there are others searching for a partner in the Turkish market, such as French media company Vivendi, the United State-based multi-story Saks Fifth Avenue, Lebanese Fransabank Group, Japan’s Marubeni and Russian energy company RusHydro.

"Today, companies across the world seek to enter high-populated international markets," according to Mark Mobius, a global investor and emerging markets fund manager.

"Turkey is one of the target countries. As Turkey has a great potential both in industrial and consumer products, many of the companies try to benefit from this opportunity," said Mobius, chair of Templeton Asset Management, a global investment fund.


/Hurriyet Daily News/