• Political volatility no deterrent as fund raises $526 million
  • Buyout firm targets consumer goods, healthcare, logistics

Abraaj Group Ltd., one of the largest private-equity investors in developing markets, plans to make as many as five purchases in Turkey over the next two years as it prepares for the country’s rebound from a failed coup.

Abraaj, which raised $526 million for a fund dedicated to investments in the country, is in talks with the owners of three “well-managed, high-quality businesses,” said Selcuk Yorgancioglu, the Dubai-based buyout firm’s head of Turkey and Central Asia. The companies operate in industries poised to benefit from growing domestic consumption, such as consumer goods and services, healthcare, financial services and logistics, he said.

The Abraaj Turkey Fund I raised more than the $500 million targeted after an extra $40 million was added for co-investments, Yorgancioglu said. This comes as President Recep Tayyip Erdogan has cracked down on opposition members in the wake of a coup attempt on July 15 that left nearly 300 people dead and after a series of terror attacks in the past year that killed more than 250 people.

“Political volatility is not affecting our transactions,” Yorgancioglu said. “We expect the country to normalize much more quickly than many other people think. During this period we are continuing negotiations on the transactions we currently have in our pipeline.”

Shopped Around

Abraaj, which has about $10 billion under management globally with investments in more than 30 countries, has invested more than $900 million into 11 companies in Turkey over the past decade. The new fund has already bought a 25 percent stake in Turkey’s largest e-commerce platform, Hepsiburada.com, and almost 10 percent stake in Fibabanka AS, a lender owned by billionaire Husnu Ozyegin.

About 70 percent of contributions to the fund came from investors in Europe and North America, with institutional investors and sovereign wealth funds accounting for 78 percent of the committed capital, Abraaj said in a statement on Tuesday.

The firm, which has exited investments worth $800 million in Turkey, has no immediate plans to divest any of its seven investments in Turkey, Yorgancioglu said. 

“Our portfolio is very young,” he said. “We don’t go into deals that have been shopped around to too many investors.”

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