Yildirim Plans Ports Stake Sale to Stoke Rapid Buyout Pace

Yildirim Holding AS, a family-owned Turkish company with global interests in mining, transportation and energy, plans to sell a stake in its ports unit to sustain a rapid pace of acquisitions.

Yildirim hired JPMorgan Chase & Co. (JPM) to find a financial investor to take a stake of 20 percent to 30 percent in Yilport Holding AS, Chairman Yuksel Yildirim said in an interview in Istanbul, where the company is based. The unit operates six container ports in Turkey, Malta and Sweden, and is worth about $2 billion, so the sale may raise $600 million, he said.

“We want to use the proceeds from the stake sale in other port investments either through acquisitions or rehabilitation of the existing ports,” Yildirim said.

The chairman is one of three sons of Garip Yildirim, who started the business as a construction materials trader in northern Turkey in 1963. The company is now focusing on metals and mining, energy, ports, fertilizer and maritime businesses in a bid to boost annual sales to $5 billion by 2023 from $1.2 billion. It’s relying on investments and acquisitions in countries from Russia to Colombia to reach the goal.

Yildirim recently bought OAO Mechel’s ferro-alloy units in Russia and Kazakhstan for $425 million, coal mines and ports owned by CCX Carvao da Colombia SA for $125 million and 80 percent of Swedish port operator Stuveribolaget Gavle AB for an undisclosed price. It has $12 billion in investment plans with partners for projects in Turkey and abroad, with five- to 10-year horizons, the chairman said.

Global Reach

The company is seeking $4 billion of projects including ports, coal mines and railways in Colombia, and $4 billion for coal- and gas-fired power plants in Turkey. Port plans total about $2 billion, and Yildirim intends to invest another $2 billion in ferrochrome production and fertilizer distribution, according to the chairman.

“We want to create a group of companies with a total market value of $30 billion by 2023,” he said, up from about $8 billion now.

For the port stake sale, the company is in talks with infrastructure funds and sovereign pension funds including in Canada and the Netherlands, according to Yildirim.

“We don’t want strategic investors,” he said. “We are looking for investors that have at least 10 years of investment plans.”

Turkey Ports

Yilport is shortlisted for port auctions in Oslo and at Turkey’s Derince facility, and is in talks to add ports on the Marmara and Mediterranean coasts to “grow as much as we can” in Turkey, Yildirim said.

In regions such as Africa, the company plans “mixed structure” ports that combine mining and harbor services.

In Ivory Coast, Yildirim set up a commuter ferry service with a local partner and will put 45 boats in service with a 50 million-euro ($68 million) investment, he said. It intends to offer ferry services in other countries, and also is near agreement to build coal-fired power plants and a $1.5 billion port in Ivory Coast.

“Total investment potential for projects could be as much as $6 billion in Africa,” Yildirim said.

The company bought a 24 percent stake in CMA CGM SA, the world’s third-largest container shipper, for a total of $600 million in 2010 and 2011. A five-year plan to improve the French company means it will exit the investment next year, he said.

CMA CGM

“Because the business is going well after we imposed cost-cutting measures worth $400 million and the company has turned to profits, the main shareholder family doesn’t want an IPO and wants us to sell our stake back to them,” he said.

Yildirim also is in talks with Chinese shipbuilders to have 10 vessels delivered by 2018 to carry coal from Colombia to power producers in Turkey and other countries, he said.

The holding company or Yilport may sell $500 million of bonds with a five-year maturity in international markets after the group hired Bank of America Corp. for the sale last year, Yildirim said.

“This will help increase our recognition in financial markets,” he said. “We can do it in one year but if we can complete the Yilport stake sale this year, we can even do the bond sale this year too.”

Eventually, the company wants to sell shares in the mining, energy and ports units to the public, said Yildirim. Eti Lojistik, a smaller logistics business, may be the first to hold an IPO, and at some point the holding company may go public, he said.

“We have about 50 M&A deals being offered to us every year,” Yildirim said. “We are considering each of them and looking for the ones where we can use the golden mine of information we have in ports and mining.”

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

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net David Risser, Robert Valpuesta

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