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Turkey Grocer A101 Plans Growth as Stake Sale Dropped, CEO Says

A101 Yeni Magazacilik AS, Turkey’s second-largest discount grocery chain, will open hundreds of shops a year and its owners have dropped plans to sell a stake, Chief Executive Officer Erhan Bostan said.

“The owners needed cash in 2011 and started looking for a financial partner then,” Bostan said in an interview in Istanbul today. “Now we don’t need outside cash because the owners injected cash last year.”

U.S. buyout firm Capital Group International was near an agreement to buy 35 percent of A101, valuing the Istanbul-based company at 900 million liras ($501 million), three people with knowledge of the matter said in March last year. The sale process stopped because of disagreement on price as the company “is growing so fast it’s not possible to set a valuation,” Bostan said.

A101 is now looking for organic growth and will add at least 500 stores annually in the next five years from 2014, Bostan said. A101, which competes with BIM Birlesik Magazalar AS (BIMAS), Turkey’s biggest discount retail grocery chain, will add 450 stores with 90 million liras of investment in the rest of this year to reach 2,450 stores, Bostan said.

The Aydin family owns 55 percent of the grocer and Asya Katilim Bankasi AS (ASYAB), an Islamic lender in Turkey known as Bank Asya, has 22 percent, Bostan said. The remainder is owned by Turkish families, he said.

Bank Asya may exit its investment in 2016 or 2017 through an initial public offering or a sale to existing partners, Bostan said.

A101 aims to increase sales 55 percent to 3.28 billion liras this year, Bostan said. The company plans to open stores outside Turkey after the second half of 2015, he said.

Sales in Turkey’s so-called “organized food retail industry,” which excludes many street vendors and the black economy, accounts for half of Turkey’s total food retail market and totalled 70 billion liras last year, according to Bostan.

To contact the reporter on this story: Ercan Ersoy in Istanbul eersoy@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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