EBRD Sees Record Turkey Equity Investment in Year of Uncertainty

(Bloomberg) — The European Bank for Reconstruction and
Development is set to make record equity investments in Turkey
this year, even as the country awaits the formation of a
government and confronts regional instability.

The EBRD, as the London-based lender and investor is also
known, will have 300 million euros ($329 million) to 400 million
euros of investments in Turkish assets this year, Jean-Patrick Marquet, its country director, said in a July 30 interview in
Istanbul. These include minority stakes in Borsa Istanbul AS,
Turkey’s sole stock exchange, and renewable power producer Gama
Enerji AS, he said.

The bank aims to increase its Turkish lending and
investments to 1.75 billion euros from 1.4 billion euros in
2014, even as political parties struggle to form a government
after June elections ended more than a decade of single-party
rule. While uncertainty clouds domestic politics, Turkey is
striking at Kurdish rebels and Islamic State militants in its
Syrian and Iraqi neighbors.

The investment plans for this year are the EBRD’s largest
yet for Turkey and among the biggest of any country where the
bank operates, Marquet said. “I am very hopeful that we will
sign a large amount of equity this year.”

EBRD has invested 880 million euros in 17 projects in the
first half of 2015, Marquet said. “We are exactly on track for
our plan for the whole year.”

The lender signed a preliminary deal on May 29 to buy a 10
percent stake for an undisclosed price from Borsa Istanbul as
the government prepares the company for an initial public
offering next year. The bank is considering a $105 million
investment for a minority stake in Ankara-based Gama Enerji.
International Finance Corp., the World Bank’s private industry
investment arm, bought a 27 percent-stake from Gama Enerji in
July for an undisclosed price.

Negotiations with asset owners are “challenging” in
Turkey at the moment and sellers need to recognize that
conditions aren’t as favorable as they were as recently as two
years ago, Marquet said. Longer term, the country remains a
positive investment destination, he said.

“The key reason why we are investing heavily in Turkey is
that we believe the fundamentals for long-term investment and
growth are strong,” Marquet said. “We see demand for our long-term finance and know-how in the sustainable energy field,
infrastructure and in the private sector.”

To contact the reporter on this story:
Ercan Ersoy in Istanbul at
eersoy@bloomberg.net

To contact the editors responsible for this story:
John Viljoen at
jviljoen@bloomberg.net
Jon Menon

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