Eurobank, the third-largest Greek bank, said yesterday it had agreed to sell 70 percent its Turkish subsidiary Eurobank Tekfen to Kuwait’s Burgan Bank, as the total value of the unit is calculated at 272.7 million euros ($359 million).

“Under the terms of the transaction, Burgan will acquire 99.3 percent of Eurobank Tekfen from Eurobank EFG and the Tekfen Group for an upfront cash consideration of 641 million Turkish Liras,” Agence France-Press quoted a Eurobank statement issued yesterday. The statement added that the deal, scheduled to be completed in the third quarter of 2012, would increase the Greek group’s core tier I capital by almost 300 million euros and improve its liquidity position by 800 million. The deal is subject to regulatory approval.

Tekfen’s 30 percent stake

Greek banks have been trying to bolster their shareholder funds after the government accomplished a bond swap in March that canceled nearly a third of its huge debt. Eurobank Tekfen’s General Manager Mehmet Sönmez said yesterday that 70 percent of the bank has been sold to Burgan Bank, and the two parties will negotiate on the remaining 30 percent stake, according to Reuters. “If agreed, the 30 percent stake will be sold [to Burgan Bank] at the same overall valuation,” he said.

Tekfen Holding said it had signed an agreement with Eurobank that Tekfen Holding is eligible to sell its nearly 30 percent stake to either Eurobank or to a third party, in a filing to the Istanbul bourse yesterday morning.

Burgan Bank runs trade activities for Kuwait’s largest investment company, Kuwait Investment Projects Company (KIPCO). KIPCO also has a stake in United Gulf Bank and other financial firms in the Middle East and North Africa. The Kuwaiti emir and his family own 44.63 percent of KIPCO, according to Reuters.

12-04-2012

While Islamic countries have 57 percent of the world’s energy resources and a young dynamic population, their internal trade only amounts to $540 million, which leaders say needs to be remedied through linkages

The 57 members of the Islamic Chamber of Commerce and Industry need to strengthen trade ties within the Islamic world, Bülent Arınç said at the 28th General Assembly of the organization.

Deputy Prime Minister Bülent Arınç and Union of Chambers and Commodity Exchanges of Turkey (TOBB) President Rifat Hisarcıklıoğlu said the group should follow a model similar to the U.S. which trades with Canada and Mexico as well as Europe, which conducts 70 percent of its trade internally.

Hisarcıklıoğlu said the Islamic world needs to act quickly to capture economic opportunities, having missed out in the post-World War II period and the fall of communism. Time is money, he said, adding that the Islamic world has produced very little despite having one-fourth of the world’s population and 57 percent of world’s economic resources.

“We are not one. We are not a union,” said Hisarcıklıoğlu in his opening speech. “Europe trades with itself and the United States trades with Canada and Mexico. Why don’t we use them as an example?” He added that the Islamic world was hampered by visa and trade restrictions, and they needed to be addressed.

Islamic world ripe for trade, investment

Hisarcıklıoğlu said three factors make the Islamic world ripe with potential; its young dynamic population, its dominance over the globe’s energy resources and its large industrial resources, which are second only to China. He also said in order to increase trade there would need to be more transportation linkages in the region, such as rail lines.

Professor Ekmeleddin İhsanoğlu, secretary-general of the Organization of Islamic Cooperation (OIC), said in his speech that one important area the meeting might wish to focus on when examining modalities for enhanced public-private partnership in OIC countries is their favorable investment climate.

“The strength of the OIC economies is evident in the availability of a young and vibrant population … furthermore the total reserves of OIC countries are increasing, accounting for 33.1 percent of OIC GDP in 2009, with their proven oil reserves accounting for 69 percent of the world total,” said Ihsanoğlu.
“When we look at internal trade in the Islamic world, it only amounts to $540 million, and this shows we have a long road ahead,” said Arınç at the General Assembly. However, he said when looking at the economic potential of Islamic countries, a 20 percent internal trade target for 2015 did not seem too difficult. He also echoed Hisarcıklıoğlu by saying that while Europe conducts roughly 70-75 percent of its trade internally, this figure is as low as 14 percent for Islamic countries.

A group of businessmen attending the General Assembly in Istanbul is scheduled to meet with
businessmen in Turkish Cyprus today under the auspices of the TOBB.

13-04-2012

Turkish-American trade volume has increased more than 100 percent in four years, says Rıza Nur Meral, the president of TUSKON. Some 400 American firms have invested in Turkey since 2008, Meral adds

The number of American firms active in Turkey reached 1,200 this year, up from 800 in 2007, with a total monetary investment of $6 billion, according to the Confederation of Businessmen and Industrialists of Turkey (TUSKON).

The total bilateral trade volume has increased more than 100 percent since the financial crisis hit the United States in 2008, now amounting to $21 billion. Interest from American firms in the Turkish real estate industry continues to increase, daily Hürriyet reported yesterday.

“We will visit 23 states to improve trade relations with the United States. Many small and medium enterprises want to do business with the United States, but their biggest problem is establishing contacts,” TUSKON President Rızanur Meral told the Hürriyet during the “Construction Process of the Turkish-American Economic Cooperation” event, which was organized by TUSKON and held in Washington D.C. April 6-10.

According to Meral, American firms have been working towards developing markets in Turkey after the 2008 economic crisis. “First of all, Turkish businesses should know that America is not limited to New York and Chicago. Those are saturated markets, but there are serious business opportunities in other states,” he said.

The Turkish business world should make use of the nearly 50,000 Turkish students currently studying in the United States to significantly increase exports to the country, Meral said, adding that business students were known to closely follow industry developments and possess important knowledge of American industries.

Turkey has started to become a global actor, Secretary of Commerce John Bryson, who also attended the event, told daily Milliyet.

“I went to Turkey as the chief executive officer of Edison International in the 1990s and witnessed the country’s potential. Since then I have seen that Turkey has been growing dramatically. Ankara’s aim to make Turkey one of the 10 largest economies by 2023 is a totally reasonable target,” he said.

Bryson is scheduled to visit Turkey from June 25 to 26, along with U.S. Trade Representative Ron Kirk, in order to attend the “Strategic, Economic and Commercial Cooperation” meeting.

The two countries established a “model partnership” in 2009 during American President Barack Obama’s visit to Turkey.

Report on economic ties
A report on U.S.-Turkey economic relations will be released on April 12 at the “Turkey-USA Business Forum” in Istanbul. The report, titled “U.S.-Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” was prepared by both the Turkish Industry & Business Association (TÜSİAD) and the U.S. Chamber of Commerce (USCC).

The report analyzes current mutual trade and investments with suggestions on how to improve bilateral economic relations between the two countries.

Turkish and Chinese leaders meet in Beijing China to explore economic opportunities between the two largest growing economies in 2011. Several deals were signed mainly in the areas of energy and technology

Turkish and Chinese companies signed several agreements, particularly on energy investments, yesterday within the scope of the four day visit to the Asian giant by a large Turkish mission headed by Prime Minister Recep Tayyip Erdoğan.

“I believe that your visit will be beneficial to developing strategic relations between China and Turkey,” Chinese President Hu Jintao told Erdoğan at yesterday’s meeting, according to Anatolia news agency.
The trade deals were signed under the auspices of Economy Minister Zafer Çağlayan and Energy Minister Taner Yıldız.

Turkey’s Hattat Holding and Chinese China Avic International Holding agreed to cooperate in engineering, purchasing and construction of a 1,320-MW thermic power plant to be built in the northern Turkish province of Bartın. The project costs about $1.5 billion.

Under the agreement, the two companies aim to provide 5 million tons of charcoal from pits in Bartın’s Amasra town. This amount will be raised to 10 million tons in the future. This project is expected to reduce charcoal import by $1 billion.

Also, Turkey’s Demkor Mining Industry & Trade Limited Company and Beijing houugang International Engineering Technology initialled an agreement on technology transfer, project design and construction. The project is worth $ 500 million.

Moreover, Turkey’s Sun Group and China Railway Shanhaiguan Bridge Group Co. (CRSBG) are planning to co-produce iron bridge materials and railway equipment to be sold in Turkey and surrounding countries. Turkey’s Akfel Group and China Sun Energy also signed an agreement worth $350 million to produce solar panels in Turkey. Furthermore, Turkish construction magnate Ali Ağaoğlu also signed a deal with China’s largest turbine producer Sinovel for a 600 MW power plant with a $1 billion investment.

A day earlier, Turkey and China inked two deals on cooperation in nuclear power plant building. Along with China, Turkey is bargaining with South Korea, Japan and Russia for the construction of its planned second nuclear plant.

27 year gap

The strategic deals have filled a “27 year-gap” according to China Daily newspaper.

Erdoğan yesterday visited a satellite manufacturing facility in Beijing.

Turkey’s state run broadcaster TRT sold its television shows like “Leyla and Mecnun” and “Seksenler,” to China’s CCTV, according to daily Hürriyet.

Chinese firms, industrialists and traders should explore opportunities in Turkey, said Minister Çağlayan, speaking at the Turkey-China Economy and Trade Forum in Beijing yesterday.

Çağlayan said Turkey and China were the two countries that connected the western most point of Asia with the eastern most point and that both countries had the necessary infrastructure to increase economic cooperation with one another.

Chinese Deputy Prime Minister Wang Qishan said, meanwhile, the number of Chinese tourists to Turkey went up by 28 percent in 2011 and the number of Turkish tourists to China saw a 17 percent increase.

He also said China would work with Turkey to increase the trade volume between the two countries to $50 billion by 2015 and $100 billion by 2020.

The Turkish mission moved to Shanghai later yesterday after finishing talks in Beijing.

Despite a general decline in M&A in other industries, the aggregate value of global technology M&A during Q3 2011 totalled $56.4bn, an increase of 8 percent compared to Q2. Furthermore, data from Ernst & Young’s (E&Y) ‘Global Tech Update’ show that private equity firms contributed more than half of the deals valued above $1bn.
This increase in the value of technology M&A is impressive, especially considering reports that global economic uncertainty and market volatility has led to an 18 percent sequential, and 21 percent year on year (YOY), decline in the value of global transactions for all industries. The aggregate $56.4bn of announced tech deal value in Q3 marks a YOY increase of 22 percent and is the highest total for any calendar quarter since 2007. Moreover, the average value of deals announced in Q3 2011 has increased 26 percent YOY to its highest level in 11 years, rising from $176m in Q3 2010 to $221m.
However, although total deal value has increased, volume remains subdued.
Despite a general decline in M&A in other industries, the aggregate value of global technology M&A during Q3 2011 totalled $56.4bn, an increase of 8 percent compared to Q2. Furthermore, data from Ernst & Young’s (E&Y) ‘Global Tech Update’ show that private equity firms contributed more than half of the deals valued above $1bn.

This increase in the value of technology M&A is impressive, especially considering reports that global economic uncertainty and market volatility has led to an 18 percent sequential, and 21 percent year on year (YOY), decline in the value of global transactions for all industries. The aggregate $56.4bn of announced tech deal value in Q3 marks a YOY increase of 22 percent and is the highest total for any calendar quarter since 2007. Moreover, the average value of deals announced in Q3 2011 has increased 26 percent YOY to its highest level in 11 years, rising from $176m in Q3 2010 to $221m.

However, although total deal value has increased, volume remains subdued.

The number of deals fell by 2 percent for the second consecutive quarter to 759, down from 777 in Q2 2011 and 794 in Q1. Even so, the increase in deals above $1bn overrides this decline in volume. For the first time since Q1 2000, two deals topped the $10bn mark during the third quarter of 2011.
Although down 18 percent YOY, the number of PE tech deals climbed on a quarterly basis through 2011, from 73 to 76 to 81. Furthermore, the number of buyouts in the tech sector rose 86 percent YOY to a total of $14.6bn, highlighting the strong presence of PE firms in this area. Indeed, six of the 11 biggest tech deals announced during Q1 involved private equity firms. The largest of these was the $2.6bn pooling of Hitachi, Sony and Toshiba’s small-panel LCD operations by Innovation Network Corporation of Japan, a PE firm backed by the Japanese government.
In terms of corporate deal data, volume has declined since the beginning of the year, from 721 transactions in Q1, to 701 in Q2 to 678 in Q3, even though the overall number of deals was up 13 percent on the same period in 2010. Similarly, the aggregate value of corporate deals rose 9 percent YOY, but slid 5 percent from $44.2bn in Q2 to $41.8bn in Q3.
A look at cross-border deal data reveals 277 transactions during Q3, accounting for 36 percent of overall activity. Although this figure was down from 40 percent of total deals in Q2, the contribution of cross-border deals in Q3 was still ahead of the 34 percent in Q1 and for all of 2010. Meanwhile, the aggregate value of cross-border deals in Q3 was $21.3bn, or 38 percent of aggregate value, compared with 46 percent in Q2.
The largest deal of the quarter was Google’s $11.9bn pending purchase of Motorola Mobility, announced in August. The deal marks the largest technology transaction since HP purchased Electronic Data Systems Corporation for $12.6bn in May 2008. Motorola Mobility is a provider of set-top boxes to cable companies, and, assuming the deal closes, Google will become a supplier of Android smartphones as well as television set-top boxes.
The need for huge amounts of data has been driving large deals, according to E&Y’s report. Business systems, social networking platforms and smart metering systems are generating an ever-increasing mass of data, and companies are struggling with what has come to be known as the ‘big data’ problem. As most of this data involves customer interactions, technology that helps companies understand it all can provide important information and insight. This is the reasoning behind the second largest tech deal of Q3 2011: Hewlett Packard’s $10.2bn acquisition of UK-based Autonomy, which is expected to strengthen the company’s data analytics, cloud computing and workflow management capabilities.
The third largest deal of the quarter, and also the transaction with the highest premium at 67 percent, was Broadcom’s pending acquisition of NetLogic Microsystems for $3.5bn, announced in September. NetLogic makes a variety of multi-core processors designed to accelerate data transmission in fixed and mobile networks, including 3G/4G mobile wireless infrastructure, cloud and enterprise data centres, and metro Ethernet networks. The deal aims to strengthen Broadcom’s core mobile network offerings.
Finally, the tenth largest deal of Q3 was Electronic Arts’ $1.3bn purchase of PopCap Games. In recent years, EA has been on a steady acquisition trail, transforming itself from a publisher of traditional console games into a multiplatform digital game provider. E&Y points out that although the online games sector sees dozens of deals every quarter, this deal is the first to break the $1bn barrier.

Selina Harrison, January 2012

On a geographical basis, North America generated almost half of the aggregate deal value for the quarter, raising $29.9bn across 365 buyouts. Even so, this was a decline of 24 percent on the previous quarter. Buyouts conducted in Europe raised a combined $22.8bn during the third quarter, a 30 percent decrease from the 246 deals worth $32.3bn conducted in Q2. Meanwhile, in Asia and Rest of World, deals with an aggregate value of $8bn were announced, an increase of 11 percent on the $7.2bn of deals in the region during the second quarter.

In terms of exits, 254 deals were announced in the third quarter with a total value of $56.2bn – a 54 percent decrease from the record high of over $120bn during the second quarter. As with buyouts, this decline has been primarily due to a marked absence of exits valued at over $1bn, with only 12 in this range during Q3, and none over $5bn. Despite this slowdown in exits, Preqin points out that activity is still above the levels witnessed in late 2008 and 2009.

Almost three-quarters of the total number of deals made in Q3 were in the small-cap space less than $250m. Mid-cap deals valued between $250m and $999m accounted for 19 percent of total deal volume and 31 percent of the aggregate capital put to work. Although accounting for just 8 percent of deal volume during Q3, deals exceeding $1bn made up 56 percent of aggregate deal value, despite the slowdown in economies around the world.
Of the 17 deals made in Q3 valued at $1bn or more, the majority occurred in July, generating an aggregate $30bn. As market volatility returned and the European sovereign debt crisis became more problematic, large-cap deal activity slowed significantly towards the end of the quarter. Only two large-cap deals were announced in September, generating just over $12bn.
The $6.3bn acquisition of Kinetic Concepts, provider of treatments for wounds and tissue regeneration, was announced in July. Bought by a consortium comprising Apax Partners, CPP Investment Board and Public Sector Pension Investment Board, the takeover of San Antonio based Kinetic Concepts is the largest buyout in the post-Lehman era and was announced before the recent wave of market uncertainty.
In terms of sector activity, more deals were completed in the industrials sector during Q3 than in any other, accounting for 29 percent of volume and 16 percent of aggregate value. Business services accounted for 21 percent of total deal value, helped by CVC Capital Partners’ $2bn purchase of capital markets technology firm ConvergEx. Meanwhile, healthcare accounted for 18 percent of total deal value. This was due in large part to the two biggest buyouts of the quarter, both of which were public to private transactions: the $6.3bn Kinetic Concepts deal, which accounted for more than 50 percent of the total value of healthcare investments in Q3, and Blackstone‘s $3bn acquisition of medical data services provider Emdeon Inc, announced in August.
The information technology sector also attracted a significant amount of investment, with four of the top 10 deals announced during Q3 focused on this sector. The largest of these was the acquisition of web hosting company The Go Daddy Group Inc by KKR and Silver Lake for $2.25bn including debt, announced in July. The combined value of this deal and the buyouts of SunGard Higher Education by Hellman & Friedman, Blackboard by Providence Equity Partners, and the Alibaba Group by a consortium led by Silver Lake, had a cumulative value of more than $7bn – a significant proportion of the total $12bn invested in IT.
Breaking down the data by deal type reveals that the $31.2bn worth of leveraged buyouts contributed 52 percent of the total value of deals announced during Q3, down slightly on Q2’s 60 percent. The number of LBOs remained unchanged, accounting for 43 percent of all deal activity in both Q2 and Q3. Add-on deals accounted for 37 percent of all deals, up from 33 percent in the previous quarter. The share of public to private deal volume declined slightly from the previous quarter, although the aggregate value increased from 22 percent to 29 percent. Meanwhile, the volume of growth capital deals announced increased slightly from 12 percent in Q2 to 14 percent in Q3, and their aggregate value accounted for 6 percent of the total, compared to 4 percent in the previous quarter. Up to the third quarter of 2011, 257 secondary buyouts were announced with an aggregate value of $53.2bn. This surpasses the whole of 2010 when 251 secondary buyouts worth $52.6bn were announced. A closer look at secondary buyout activity during Q3, however, reveals a dip – the 87 announced deals valued at $16.6bn declined from 101 deals valued at $25bn in Q2. In contrast, secondary buyout figures for Q3 mark a 44 percent increase in value from Q1 2011, and constitute one of the strongest quarters for secondary buyouts in the post-Lehman landscape, surpassed only by Q2 2011 and Q3 2010. With private equity firms sitting on an estimated $400bn in dry powder, there is a significant amount of capital at their disposal for new deals. Furthermore, in a recent survey of 37 private equity firms, Preqin found that nearly half of respondents expect secondary buyouts to increase going forward. The prospects for fundraising, however, are less bright

During Q3, 97 private equity funds reached a final close, raising an aggregate $44.8bn which, compared to the $82.8bn raised by 175 funds in the previous quarter, was a significant drop. However, a further 109 funds held interim closes during Q3, securing commitments totalling $42.7bn towards their fundraising targets. A geographical look at fundraising activity shows that funds primarily focusing on North America raised the most capital, with 37 funds gaining a total of $22.5bn in commitments. The 28 funds targeting Europe raised an aggregate $11.3bn, while the 32 funds focused primarily on Asia and Rest of World generated a combined $11bn.

The 19 buyout funds that closed during Q3 contributed the most capital for the quarter, raising $14.4bn. Berkshire Fund VIII, which closed in July 2011, was particularly active in this arena, raising $4.5bn and exceeding its initial $4bn target. An aggregate $10.8bn was raised by 16 real estate funds while five distressed-focused funds secured $6.5bn – two-thirds of which was raised by the $4.4bn Centerbridge Capital Partners II fund.

As of October 2011, there were 1728 funds on the road seeking a combined $706bn, an increase on the 1676 funds on the road chasing $680bn during Q2 2011. Funds that closed in Q3 took an average of 17 months to reach their target, a slight improvement on the average of 20.4 months taken to raise funds closed in 2010.

To gain some insight into how the fundraising environment will play out in the near term, Preqin interviewed 120 limited partners on their plans for investing in private equity over the next 12 months. Of those questioned, 66 percent said they will be investing in the asset class during this period, leading Preqin to note that recent volatility in public markets has done little to deter investment in private equity funds.

However, the longer term outlook may be different. Helen Kenyon, senior manager at Preqin concluded that “although this is encouraging news for managers on the road, it is still important to note just how many firms are currently competing for investor commitments. 1728 funds are seeking capital at present, more than has been seen at any point in the past couple of years, and it is set to remain extremely difficult for managers to stand out in this crowded market.”

Selina Harrison, January 2012