Capital Compass – How Interested Are Investors in Turkish Companies? | Yalçın Nak

This week on Capital Compass, we had an in-depth conversation with Yalçın Nak, founding partner of Taxim Capital and Alkima Partners, about private equity investment funds and interest in Turkish companies. Nak discussed the details of investments made in Turkish companies and the opportunities these investments bring.

Taxim Capital and Alkima Partners

Yalçın Nak began by providing information about the activities of Taxim Capital and Alkima Partners. Taxim Capital has been investing in Turkey's mid-sized companies with growth potential since 2014, while Alkima Partners has been doing so since last year. Nak stated that these investments aim to support the growth stories of these companies, adding that they have invested in 8 companies under the Taxim umbrella and 2 companies under the Alkima umbrella to date. He said that these companies operate in a wide range of sectors, from restaurant chains to cybersecurity, engineering software to traditional fermented beverages.

What Are Private Equity Investment Funds?

Explaining what private equity investment funds are, Nak stated that these funds are not banks and do not provide financing, but rather invest in companies by establishing capital partnerships. He said that the funds seek to understand the companies' vision and past successes, and establish partnerships in this way. He emphasized that they do not require any collateral when investing, but rather provide capital based solely on their trust in the vision of the company and its founders.

Interest in Investors and Turkish Companies

Nak stated that foreign investors' interest in Turkey stems from institutional sources such as mission banks and development banks, adding that these sources prefer to invest in Turkey's dynamic and growth-potential medium-sized businesses. He expressed that investors trust the growth rate of the Turkish economy and the dynamism of companies. However, he noted that convincing foreign investors has become difficult due to reasons such as inflation and currency fluctuations.

Regarding local investors, he stated that they have turned to insurance companies, pension funds, portfolio management companies, and industrialist families. He noted that an increasing number of industrialist families in Turkey are investing their wealth in funds. He stated that Private Equity Investment Funds were not well known in Turkey 10 years ago, but today they have become more widespread and understandable.

Private Equity Funds for Companies

Explaining when a company might need a private equity fund, Nak stated that companies generally need capital for goals such as capacity expansion, new product development, and opening new markets. He also stated that intergenerational conflicts in family businesses also create a need for private equity funds. The need for companies to become more institutionalized is also one of the reasons for turning to funds.

Nak stated that institutionalization processes accelerated with the entry of private equity funds into the company. He said that companies became more meticulous in areas such as feasibility studies, occupational health and safety, environmental health, and financial discipline. He stated that this enabled companies to achieve a more organized and sustainable structure.

The Turkish Economy and Investment Environment

Nak stated that Turkey's dynamic economic structure and growth potential have attracted the interest of foreign investors, adding that current economic conditions provide a favorable environment for funds to be preferred. He noted that private equity funds represent an important alternative for companies during this period when access to financing is difficult and expensive. He emphasized that foreign investor interest has increased recently and that Turkey is an attractive country for long-term investments.