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After it delivered a high investment volume in difficult market conditions last year, the EBRD is looking to increase its investment in Turkey in 2020 as the economy is set to rebound.
The year 2019 was challenging for the Turkish economy. It saw a worsening of asset quality in the banking sector and deleveraging by lenders. The threat of sanctions and market instability negatively affected investor confidence, leading to very low levels of public and private investment.
Against this background, the EBRD provided €1 billion in debt and equity financing for 35 Turkish projects.
Arvid Tuerkner, EBRD Managing Director for Turkey, said: “In a difficult business environment, our business volume in Turkey remained unchanged in 2019 from the previous year. Last year we provided €1 billion in financing across various sectors and were able to support our clients to ensure continued smooth operations and the pursuit of growth opportunities. The overwhelming majority of our investment was in the private sector and half of it was in support of Turkey’s sustainability agenda, the country’s blueprint to implement the global development goals.
Mr Tuerkner added that the EBRD expects the Turkish economy to rebound in 2020: “As investors will look for finance, we will aim to support even more investment projects that boost the economy, create jobs and improve people’s lives.”
In 2020, the Bank will also work to expand its Women in Business programme and attract new lenders to the initiative. It will continue its engagement with the Turkish government to deploy energy efficiency technologies in schools and to liberalise the railway sector. The EBRD will maintain its focus on renewable energy projects.
The Bank will also explore opportunities for Islamic financial products and expects the issuances of Turkish entities to grow. Its investment will be in line with the Bank’s recently approved country strategy, which focuses on strengthening financial resilience, fostering the knowledge economy, promoting inclusion and accelerating the shift to the green economy.
A big part of this financing is expected to be in Turkish lira, as it was in 2019. Around one-third of the Bank’s 2019 financing related to local currency and the development of local capital markets in order to help companies reduce currency risks.
One such lira loan, worth the equivalent of US$ 100 million, to energy group Enerjisa Enerji, made an important contribution to capital market enhancements in Turkey with its link to TLREF, a new risk-free benchmark overnight lending rate that the EBRD had helped develop.
The EBRD marked its 10th year of engagement in Turkey in 2019. Since 2009 it has invested almost €12 billion in various sectors of the Turkish economy, with almost all investment in the private sector. The EBRD’s €6.7 billion Turkey portfolio is the largest among the 38 economies where the Bank invests.
In the energy sector, the Bank also financed the extension of a geothermal power plant and invested in a stake in the renewable energy arm of Ictas Holding in 2019.
The EBRD’s equity transactions in Turkey focused on the technology sector, with investments in Modanisa, the online shop for Muslim womenswear, and the bus ticketing app Obilet, among others.
The Bank also boosted Turkish exporters such as the white goods maker Arcelik and the dried fruit and nut producer Isik Organic and May Seed, which exports sunflower, corn, cotton and bean seeds.
In addition, the EBRD supported foreign direct investment by financing companies such as Saudi Arabia’s Savola Group, the Luxembourg-based soybean crusher and animal feed producer Sodrugestvo and the French utility Suez which is managing the landfill of the western Turkish city of Canakkale under a public-private partnership scheme.
Responding to demand for enhanced port infrastructure, the Bank financed four Turkish ports: an innovative logistics hub to be developed by Arkas Holding in Kocaeli, Asyaport and the Tekirdag port through loans – all three in the Marmara region – as well as the Mersin international port in the south of the country through participating in a Eurobond issuance.
As bank lending remained strained, the EBRD explored new ways to expand finance for Turkish businesses and supported the leasing company QNB Finansleasing and the factoring firm TAM Factoring, as well as extended a risk-sharing agreement with Turkiye Sinai Kalkinma Bankasi (the Industrial Development Bank of Turkey or TSKB).
The Bank also engaged in the resolution of non-performing loans (NPLs). It worked with the authorities, banks and other stakeholders, held training events for debt recovery professionals and produced a report on how Turkey can ensure further resolution of NPLs. The EBRD also continued its support for the NPL asset management company Hayat Varlik.
Furthermore, the Bank’s small business team initiated 113 local advisory and nine international advisory projects with small and medium-sized enterprises (SMEs) in 20 provinces, helping them improve performance and grow.
The EBRD is a major investor in Turkey. Since 2009 it has invested almost €12 billion in various sectors of the Turkish economy, with almost all investment in the private sector. The EBRD’s €6.7 billion Turkey portfolio is the largest among the 38 economies where the Bank invests.
Across its regions, the EBRD delivered a record level of impact to its regions in 2019, honouring a pledge to raise both the quality and quantity of its investments in 38 economies across three continents.
The Bank financed an unprecedented 452 individual projects, compared with 395 a year earlier. Financing exceeded €10 billion for the first time in the Bank’s history, rising to €10.1 billion from €9.5 billion.
EBRD green economy financing hit a record €4.6 billion or 46 per cent of total business volume in 2019, underscoring the EBRD’s very strong support for the global climate agenda. |
