Finance chief touts surging investor interest in Turkish assets

Türkiye’s finance minister on Saturday hailed what he said was a growing interest in Turkish assets by investors, spearheaded by recent pledges from Gulf countries and an increase in equity and debt deals.

Treasury and Finance Minister Mehmet Şimşek cited high interest in the sale of a stake in private lender Yapı Kredi, the purchase of Turkish parcel delivery company MNG Kargo and a major partnership agreement between French energy giant TotalEnergies and prominent conglomerate Rönesans Holding.

The transactions came on top of investment pledges during President Erdoğan’s trip to the Gulf earlier this month. Türkiye sought to expand cooperation and signed multiple lucrative deals with Saudi Arabia, United Arab Emirates (UAE), and Qatar.

Agreements signed with the UAE alone are estimated to be worth $50.7 billion and include deals on energy and natural resources development, space and defense cooperation. In addition, Saudi Arabia agreed to buy Turkish drones in what is said to be the biggest defense contract in Türkiye’s history.

“We are pleased to see a surge in investor interest in Turkish assets,” Şimşek wrote on Twitter. “In addition to FDI inflows from GCC countries expected to surge over the next three years, we have seen an increase in equity and debt deals.”

One of Türkiye’s biggest conglomerates Koç Holding last Tuesday announced it sold a 6.81% stake in Yapı Kredi Bank to institutional investors through an accelerated book build process. It said the stake had a nominal value of TL 575 million ($21.36 million).

The holding said it collected nearly TL 6.8 billion after offering the stake at a price of TL 11.75 per share and added that it currently holds 27.02% of the bank’s shares, worth TL 2.28 billion. The sale is expected to increase the liquidity of the bank’s shares and its free float, Koç said in a statement, adding that it is part of the holding company’s portfolio optimization strategy.

Şimşek said it represented the largest equity offering in the last three years and included close to 40 United States and European investors, mostly long only and some hedge funds.

The same day, German courier giant DHL signed a deal to acquire MNG Kargo and its subsidiaries. DHL said it would benefit from the expected double-digit growth of the Turkish parcel market, which is significantly higher than the expected growth rate within the European Union.

According to the announcement, the complete takeover of the company with about 5,700 employees includes 27 sorting centers as well as 800 centers for the delivery on the last mile, meaning transport to people’s doorstep.

In another major transaction, TotalEnergies, on July 21, announced a major partnership with Rönesans Holding to expand renewable power generation capacity in the country.

TotalEnergies will take a 50% stake in the holding’s subsidiary Rönesans Enerji and the partners plan to build 1,000 megawatts (MW) of wind and solar farms in three years. The size of the transaction was not disclosed, but officials said the collaboration marked one of the largest joint ventures ever established in the renewable sector in Türkiye.

“All these transactions show confidence in Türkiye and our efforts in implementing sound macroeconomic policies,” said Şimşek.

The transaction followed the May elections that saw the re-election of President Recep Tayyip Erdoğan before he reshuffled his economic team and kickstarted a change in the country’s policy course.

The naming of Şimşek, the respected veteran policymaker, as economy chief and Hafize Gaye Erkan, a former Wall Street banker, as the central bank governor marked an initial sign that Ankara would revamp policies centered around monetary stimulus and opt for interest rate hikes to combat stubborn inflation, stabilize the volatility in the Turkish lira and rebuild foreign exchange reserves.

Under Erkan, the central bank has reversed course and tightened policy in the last two months. Since Erkan’s arrival in early June, the bank raised its one-week repo rate by 9 percentage points to 17.5%. It marked a reversal from an easing drive that saw the CBRT cut its official borrowing costs to 8.5% from 19% in 2021.

The bank has also begun simplifying macroprudential measures and has supported the rate hikes with qualitative and selective credit tightening.

Meanwhile, credit default swaps (CDS) protecting from non-payment on Turkish bonds for five years last week fell to below 400 points last week.

“Rational policies continue to bear fruit,” said Şimşek.

The fall marked a significant regress from as high as 700 basis points seen in May and the lowest level in nearly two years.

“Long-term investments into Türkiye will support our policies, help stabilize the lira, and result in the milder impact of the recently initiated fiscal and monetary tightening on growth,” said Şimşek.