Turkey's SWF to focus on securitization

Published 28.02.2017 00:00

The first act of business by the Turkish Sovereign Wealth Fund (SWF) will be the issuance of securities, while it will also focus on Islamic finance products in securitization, the size which will be decided separately after a valuation of transferred assets.

The fund will contact local and foreign investors for securitization over the next few months. The size of this financing, mainly obtained from abroad, will be determined in accordance with the value of assets transferred to the fund.

Even though the Treasury announced that the transferred asset size was approximately worth $160 billion with an equity size of $35 billion last Friday, an endeavor is currently underway concerning the valuation and auditing of the transferred assets by the fund. After these endeavors, the SWF's size will be calculated in the first stage, followed by the creation of a basket of assets in which these values are included and then a roadshow for securitization. According to a Turkish daily, DÜNYA, the fund is exploring various types of instrument models, especially in Islamic finance. For this reason, the issuance of "sukuk" is a major focus of the agenda for the fund.

Meanwhile in this regard, market experts pointed to the importance of keeping foreign interest in the financial instruments alive and focusing on these resources - who are the main targets - by creating ideal conditions.

The SWF's schedule for corporate valuations and the amount of securitization to be issued is 90 days. The first stage will focus on framing the transferred assets, simultaneously appealing to the appetite of domestic and foreign investors with securitization and providing funds to Turkey with the resulting size. The most important objective of the SWF is to create new investments in 2017.

In addition, to establish and manage the SWF and its subsidiary funds, the Türkiye Varlık Fonu Yönetim A.Ş. (Turkish Sovereign Wealth Fund Management) has been formed. The fund will issue the securitization itself, rather than getting a loan through subsidiaries. The transferred assets will also support the investment story of the fund. The SWF will carry out major projects with these resources and use them in new investments - particularly in the infrastructure, energy, telecommunications and technology sectors.

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