Abraaj Plans New Turkish Buyouts in 2012 After Acibadem Exit

Abraaj Capital Ltd., the Middle East’s biggest buyout firm, will buy more Turkish companies this year after it raised about $1 billion from selling the Turkish hospital chain Acibadem Saglik Hizmetleri & Ticaret AS.

The Dubai-based private equity firm, which has about $6.5 billion of assets under management, is currently in “significant negotiations with three or four companies” in Turkey, Selcuk Yorgancioglu, Abraaj’s country chief for Turkey, said in an interview in Istanbul yesterday.

Abraaj especially likes the food-making industry and the companies the firm is negotiating to buy aren’t publicly traded, Yorgancioglu said, declining to give further details.

Turkey has been a popular target for deals in recent years as companies seek to tap its $735 billion economy, which grew 8.2 percent in the third quarter of 2011, the fastest increase among Group of 20 countries after China. Ernst & Young expects mergers and acquisitions in Turkey to rise to $20 billion this year from $14 billion in 2011. Diageo Plc (DGE), the London-based distiller, bought the Turkish spirits maker Mey Icki Sanayi Ltd. for $2.1 billion from U.S.-based buyout firm TPG Capital in February in Turkey’s biggest private-equity exit ever.

“After the Mey Icki and Acibadem exits, Turkey proved to be a market where large deals can go the full cycle for private equity,” Yorgancioglu said. He added that the firm was raising a new fund, and expected to have some news regarding two more deals this year.

Foreign Investors

Carlyle Group, a U.S. private-equity firm, bought 48 percent of the Istanbul-based education group Bahcesehir Kolejleri for an undisclosed price, it said last month. Cerberus Capital Management LP, a New York-based private equity firm, announced a joint investment initiative on Oct. 4 with the Turkish broker Garanti Securities for about 10 buyouts or stake purchases in Turkish family-run businesses with market capitalizations of $50 million to $250 million.

The Gazprombank OJSC unit Prima Energy Trading LLC plans to acquire 26 percent of Avrasya Gaz AS, a Turkish wholesale gas trader. Eastgate Capital Group will also buy a 49.8 percent stake in Fabeks Dis Ticaret AS, a Turkish textile maker, according to the website of the Competition Authority, an Ankara-based antitrust body.

Company valuations in Turkey have come down since the Lehman Brothers Holdings Inc. collapse in 2008, Yorgancioglu said.

Investment Environment

“The investment environment in Turkey -- with its prudent central bank policies, stock market volumes greater than most central European countries and effective regulatory institutions -- makes it a very attractive target,” Yorgancioglu said. “Cash comes into Turkey and will keep coming.”

Turkey’s food are attractive because they export to most of the country’s Middle Eastern neighbors.

“We like the food industry here very much,” Yorgancioglu said. “We can quickly create synergies with our Spinneys supermarkets.” Spinneys, a supermarket chain based in Nasr City, Egypt, also has stores in Lebanon, Qatar and Jordan, according to the company’s website.

Abraaj, which prefers to hold majority stakes in its portfolio companies, is also looking into the services and education industries in Turkey, Yorgancioglu said. The buyout firm also plans a real estate investment through a separate fund.

Selling Acibadem

Abraaj and the Aydinlar family, which co-owned Acibadem, sold 75 percent of the parent of Turkey’s largest hospital chain in December. The deal with Integrated Healthcare Holdings Sdn, a unit of the Malaysian sovereign wealth fund Khazanah Nasional Bhd (KNBZ), put the market value Acibadem Saglik at $1.68 billion. Abraaj exited the investment while the Aydinlar family retains 25 percent.

Yorgancioglu said Acibadem’s enterprise value, the sum of it debt and equity value used as a benchmark in M&A transactions, was about $2 billion. His firm bought the stake for about $606 million in 2007 and 2008.

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

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

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