Capital Compass – How Interested Are Investors in Turkish Companies? | Yalçın Nak
On this week’s episode of “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 in Turkish companies and the opportunities these investments present.
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. Noting that their goal with these investments is to support the companies’ growth stories, Nak stated that they have invested in 8 companies under the Taxim umbrella and 2 under the Alkima umbrella to date. He added that these companies operate across a wide range of sectors, spanning from restaurant chains to cybersecurity, and from engineering software to traditional fermented beverages.
What Are Private Equity Investment Funds?
Explaining what private equity investment funds are, Nak noted that these funds are not banks and do not provide financing; rather, they invest in companies by establishing equity partnerships. He explained that the funds seek to understand the companies’ vision and past successes, and that this is how they form partnerships. He emphasized that they do not require any guarantees when making investments, but instead provide capital based solely on their confidence in the vision of the company and its founders.
Interest in Investors and Turkish Companies
Noting that foreign investors’ interest in Turkey stems from institutional sources such as mission-driven banks and development banks, Nak said these sources prefer to invest in Turkey’s dynamic medium-sized businesses with growth potential. He expressed that investors have confidence in the growth rate of the Turkish economy and the dynamism of Turkish companies. However, he noted that it has become more difficult to convince foreign investors due to factors such as inflation and currency fluctuations.
As for local investors, he said they are turning to insurance companies, pension funds, portfolio management firms, and industrialist families. He noted that a growing number of industrialist families in Turkey are investing the wealth they have accumulated in funds. He added that 10 years ago, private equity funds were not well known in Turkey, but today they have become more widespread and better understood.
Private Equity Funds for Companies
Explaining when a company might need a private equity fund, Nak noted that companies generally require capital to achieve goals such as expanding capacity, developing new products, and entering new markets. He also stated that intergenerational disputes in family-owned businesses can create a need for private equity funds. The need for companies to become more institutionalized is another key reason they turn to these funds.
Nak noted that the process of institutionalization has accelerated with the entry of private equity funds into the company. He stated that companies have become more meticulous in areas such as occupational health and safety, environmental health, and financial discipline by conducting feasibility studies. He added that, as a result, companies have achieved a more organized and sustainable structure.
The Turkish Economy and Investment Climate
Noting that the Turkish economy has attracted the interest of foreign investors due to its dynamic structure and growth potential, Nak said that current economic conditions provide a favorable environment for the selection of these funds. He noted that during this period, when access to financing is difficult and expensive, private equity funds represent an important alternative for companies. He pointed out that interest from foreign investors has increased recently and that Turkey is an attractive country for long-term investments.
