Aksa Turns Focus to Asia as Turkish Power Company Plans Sale

  • Energy firm plans global expansion as Turkey economy struggles
  • Company is in talks with investors to sell up to 49% stake

Aksa Enerji Uretim AS, the second-largest independent energy producer in Turkey, is in talks to sell a stake to investors as it considers building power plants in Asia to counter slowing growth in its home market. The stock gained the most in 11 months.

The company is in talks with three international financial investors, one from the U.S. and two from the Persian Gulf, to sell a stake of as much as 49 percent, Chief Executive Officer Cuneyt Uygun said in an interview in Istanbul on Wednesday.

“We are still in disagreement with those potential investors over the valuation of contracts in our African business,” he said. “To facilitate any stake sale from the main African operation or from the sub-units for each country there, we have reorganized our operations in the continent under special purpose vehicles set up in the Netherlands.”

Negotiations on a stake sale comes as the company sets up teams to explore the potential of Vietnam, Laos, Philippines and Cambodia, and plans to build a 500 megawatt gas-fired power plant in Indonesia, which needs 35,000 megawatts of additional power capacity in five years, the CEO said. Aksa, majority owned by founder Kazanci family, with a 16.6 percent stake held by Goldman Sachs Group Inc., is looking at Asia as its expansion drive in Africa starts generating cash.

Shares Rally

The stock rose as much as 7.2 percent, the most on an intraday basis since Aug. 9, before paring gains to trade 3.2 percent up at 3.89 liras as of 3:47 p.m. in Istanbul on Thursday. The shares have advanced 31 percent this year, giving Aksa Enerji a market value of 2.4 billion lira ($662 million).

The company has been selling wind and hydropower assets in Turkey to help repay debt after the lira’s 19 percent depreciation against the dollar over the past 12 months caused its liabilities to surge to almost eight times its earnings before interest, tax, depreciation and amortization.

“Our aim is to modify our business plan to become a global energy company instead of a local one,” Uygun said. “That’s why we developed the model to dismantle idle power plants in Turkey to re-assemble them in Africa, which desperately needs emergency electricity. We can now build power plants in Asian markets.”

The sales of 340 megawatts of power assets worth $409 million to Turkish investors Guris Holding AS, Fernas Enerji Elektrik Uretim AS and Borusan EnBW Enerji AS in the past year will cut Aksa’s debt-to-Ebitda ratio to 3.2 by the end of this year, Uygun said.

Aksa has contracts to generate 426 megawatts from power plants in Ghana, Madagascar and Mali this year with a total $250 million investment, he said. The operations will boost the company’s Ebitda to $187 million this year from $144 million at the end of 2016, Uygun said. Africa will make up 75 percent of the company’s earnings this year and 29 percent of its sales, according to a company presentation on its website.

The company may expand further in Africa. It’s in negotiations with several other countries including Cameroon, Tanzania, Gabon and Equatorial Guinea, which have gas resources but limited power investments, Uygun said.

The Kazanci family will get back the stake held by Goldman Sachs in April as part of a loan agreement to raise its holdings to 78 percent, he said.

— With assistance by Tugce Ozsoy

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