Jun 06 2012
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INTERVIEW: Abraaj To Close 2 Turkish Deals In 2012; Future Iraq Focus
Wednesday, Jun 06, 2012
(This story was originally published Tuesday.)
--One acquisition could be in the food sector, also looking at real estate purchases
--Abraaj dealmaking follows successful exit early this year in Turkey
By Asa Fitch
ISTANBUL (Zawya Dow Jones)--Abraaj Capital, the Middle East's biggest private equity firm, is looking to close two acquisitions in Turkey this year after exiting a health care investment there in January.
The company is in talks over numerous investments, and one of this year's deals could be in the food industry, Selcuk Yorgancioglu, a senior partner at Abraaj and its regional head for Turkey, Iraq and Central Asia, said on the sidelines of a World Economic Forum conference Monday.
"Turkey has vast arable land and very high quality soil, so both for harvesting but also for meat-related products it's a great resource," he said. "It's a natural export hub for the Middle East but also the Balkans and eastern Europe."
Early this year, Abraaj sold its 50% stake in Turkish health care group Acibadem, netting the company's infrastructure fund around $1 billion on an initial investment of around $600 million in 2008.
Alongside the $2.1 billion sale in February of Turkish spirits group Mey Icki Sanayi Ltd. by U.S.-based private equity firm TPG Capital, Yorgancioglu said the Acibadem divestment proved that private equity players can go through the full cycle of buying, growing and selling investments in Turkey at a time when exits in other parts of the Middle East have been difficult to clinch. Turkey has a liquid stock market and a large contingent of investors looking to buy when trade sales to competing companies remain the only viable means of exit in other countries.
"Turkey has proven itself to be an attractive market for private equity, and us and TPG were the first two firms that have proven you can do exits here," Yorgancioglu said. "The full cycle in Turkey has been completed, and now our competition has started to come in."
Abraaj is one of a torrent of Arab Gulf private equity firms that have flooded the Turkish investment market in recent years, banking on a combination of economic growth, sound regulation, liquid equity markets and rapid private-sector development. Since the beginning of last year, there have been at least seven transactions involving Turkish companies and foreign private equity firms, according to Zawya.com data. Yorgancioglu said he expected a total of five or six large private equity deals to be completed this year in Turkey.
In addition to the two Turkish private equity deals Abraaj aims to close this year, it is in advanced talks over real estate investments in Turkey through its ASAS property fund, Yorgancioglu said. The focus there was on office buildings and warehouses in Turkey's largest cities: Istanbul, Ankara and Izmir.
"We are about to close a few deals we are negotiating," he said.
Abraaj is also looking at Iraq as a potential next frontier for new investments, Yorgancioglu said. The company is in talks about purchasing assets there, but does not expect to close deals until 2013.
"We expect Iraq to be the next growth area," he said. "Iraq is coming together very nicely and you'll see us playing Iraq very soon. We're working on our Iraq strategy now. It's a market we like very much and we're very bullish on Iraq."
-By Asa Fitch, Dow Jones Newswires, +971 4 446-1685, email@example.com; Twitter: @ZDJnews
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