Mediterra Capital Management Ltd., a buyout firm based in Istanbul, expects to raise a total of 150 million euros ($195 million) in January for its debut fund focused on small Turkish companies.
The fund, domiciled in Guernsey, plans to invest in companies with annual sales between $25 million and $250 million, aiming for an average of $20 million per deal, Ahmet Faralyali, the firm’s managing partner, said in an interview in Istanbul on Nov. 30.
Mediterra bought a majority stake in the payment-processing company Mikro Odeme in January and last month acquired half of Mobiliz, an Ankara-based fleet telematics company, from the fund’s first 100 million euros raised, he said.
Mediterra joins the growing number of Turkey-based buyout firms -- Actera Partners LP, Turkven Private Equity and Unlu Private Equity -- set up by former investment bankers and partners who worked in international firms and managed in Istanbul. Carlyle Group LP (CG:US), Blackstone Group LP (BX:US), BC Partners Ltd. and Cinven Ltd. have invested in the country’s economy, which grew 2.9 percent in the second quarter after expanding by 8.5 percent in 2011. Turkey had 46 mergers and acquisitions done by private equity firms out of a total of 241 deals last year, Deloitte & Touche LLP said in January.
“There are thousands of companies that are potential targets in the segment we are aiming at,” Faralyali said. “Our aim is to grow the company we invest in by about three times in five years in terms of valuation,” he said.
Mediterra plans to invest in companies from industries that are “facing consumers” in healthcare, education, tourism and entertainment, as well as companies providing business-to- business services, Faralyali said. The firm also aims at manufacturers and exporting companies, he said.
“We want to have 40 percent or 50 percent of our investment portfolio from companies outside Istanbul,” Faralyali said, referring to assets in Ankara, Izmir, Bursa and Kocaeli, where most small and medium-sized businesses are located. Istanbul is Turkey’s commercial and financial center.
Nearly 84 percent of all private equity investments in Turkey have been made in companies in Istanbul, which accounts for as much as 35 percent of gross national product, he said.
Faralyali, a former Lehman Brothers Holdings Inc. investment banker, managed KKR & Co. (KKR:US)’s purchase of the Istanbul- based shipping company UN Ro-Ro Isletmeleri AS for $1.2 billion in 2007, the largest private equity deal in the country at the time, before co-founding Mediterra with partner Murat Erkut, also a former Lehman managing director, he said.
Investors in Mediterra’s fund include International Finance Corp., European Bank for Reconstruction and Development, European Investment Fund, AlpInvest Partners BV, KfW Bankengruppe of Germany, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden NV, known as FMO, as well as private investors and entrepreneurs from wealthy Turkish families, Faralyali said.
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