The interest of foreign investors in the Turkish investment environment continues as the value of mergers and acquisitions (M&A) since the beginning of the year has reached $8 billion, although not all of the transactions have been completed. The value of around 300 M&A transactions in 2017 was recorded at $10 billion in 2017.
Pragma Corporate Finance Managing Director Kerim Kotan stressed that M&A transactions this year will exceed last year's value and are predicted to reach $11 to $12 billion.
Evaluating the six-month performance in company mergers and acquisitions, Kotan said, "We need to analyze the dynamics of this year very well. In the mergers and acquisitions our company designs, we observe that leading investment funds and companies show great interest in M&A with Turkish firms," and added that the value of M&As by the end of the year will easily exceed $10 billion.
Kotan stressed that the confidence that could be injected into the international markets will be decisive in making Turkey an attraction point for foreign direct investments again. In that case, he claimed, Turkey will receive more investments from the U.S., European Union (EU), Saudi Arabia, United Arab Emirates (UAE) and Asian countries with developed capital structure.
The sustainability of structural reforms and steps to be taken to make the processes easier for foreign investors
will also significantly support M&A size.
Kotan highlighted that the demand of the foreign investors in the second half of the year will determine the course of next year. The road map the new government will devise and the economy policies to be implemented are being closely watched by international investors and finance institutions.
"We observe that foreign investors closely follow the e-commerce, export-oriented industry and B2B services," Kotan said and added that Turkey preserves its nature as an attraction center for strategic and financial investments.
Kotan said that on the contrary to the general practice that volatile exchange rate and markets and economic slowdown does not generally reflect well on M&A transactions, Turkey has enjoyed the foreign investors' interest and above-the-expectations volume in company mergers and acquisitions. The steps to be taken to ensure stability and confidence will further give momentum to the interest of foreign investors.
Last year, when Turkey's ties with the U.S. strained, two Turkish firms were sold to American investors, Kotan noted.
The U.S.-based Vinmar, which has an annual turnover exceeding $5 billion acquired a majority stake in Turkish chemical products distributor Veser Kimya. Just before elections, Gates Corporation, the world's largest industrial belt manufacturer, bought Turkey's leading automotive part producer Rapro.
The capital outflows from emerging markets continues, Kotan said and emphasized that the U.S. Federal Reserve is determined to hike interest rates and the European Central Bank (ECB) will end the bond-buying program. This environment does not provide a perfect picture for emerging economies. However, in case Turkey continues to attract more foreign capital boosted by sustainable growth, the country can avert the impact of external imbalances.