UAE’s $51 Billion Pledge for Turkey Is Marred by Failed Deals
(Bloomberg) — The United Arab Emirates’ pledge to invest $51 billion in Turkey is faltering two years after it was announced, as a rebound in Ankara’s economic fortunes emboldens local firms to hold firm on valuations and stifles deals.
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The latest setback came when AD Ports Group, a company backed by Abu Dhabi wealth fund ADQ, failed to close a deal to acquire operating rights for a port in western Turkey. Other deals including an offer for one of Turkey’s largest banks and an $8.5 billion debt issue have also fallen apart.
Valuation disagreements have been a major sticking point, according to people familiar with the matter. Gulf investors, who often seek distressed assets at a discount, have struggled to find common ground with Turkish sellers reluctant to part with holdings at cut-rate valuations, the people said, declining to be identified discussing confidential information.
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The July 2023 pledge, announced after Turkish President Recep Tayyip Erdogan secured reelection, was expected to help stabilize the flailing economy and fund reconstruction efforts following devastating earthquakes.
Since then, however, policy makers have managed to avert a foreign-exchange reserves crisis and put the economy on sound footing by sticking to orthodox monetary policies. That turnaround made the UAE’s cash less critical for Ankara.
“Turkish banks and firms have been easily borrowing from abroad and the central bank has built up reserves since then,” said Haluk Burumcekci, an Istanbul-based economist and founder of research and consultancy firm Burumcekci.
Turkey put an $8.5 billion sukuk deal on hold last year as Ankara viewed the yield demanded by the UAE as unfavorable. First Abu Dhabi Bank PJSC’s discussions to acquire a controlling stake in Turkish lender Yapi Kredi Bankasi AS and renewable energy giant Masdar’s talks to buy into Fiba Yenilenebilir Enerji collapsed due to disagreements over valuations.
Abu Dhabi conglomerate International Holding Co.’s units — Multiply Group and Ghitha Holding — failed to close deals for a Turkish waste management firm and a cargo airline. Other high-profile deals including building a railway over Istanbul’s Bosphorus Strait and investments into Turkish defense firms are still pending.
