In light of the epic restructuring that is taking hold of the global financial markets, we have been witness to wild fluctuations in investor appetite for emerging markets – specifically for Turkey.
The question is not ‘which’ investors are interested in Turkey as we still see the usual suspects in the market for deals. The questions would be more appropriate as: ‘how has investment strategies changed throughout the region’?
It should come as no surprise that private equity and VC players tend to be some of the most flexible and diverse investment platforms available and to this end, they often have an uncanny ability to shift gear in times of uncertainty. This is why many players that I speak with have either altered their investment strategies or have consolidated their positions considerably.
In terms of investment strategies, I’ve mentioned in previous posts that private equity and venture capital has essentially taken up the void in the credit markets left by banks. Many of these institutions are now focusing on structured debt instruments as their primary offering to both private and public companies across the region. The days of buy-outs seem to (at least for the time being) have left us.
In addition to this new investment strategy, there is considerable consolidation of portfolio companies being realized. I heard from a good source that some private equity players are offloading their portfolios at an average discount rate of 75%.
We should be mindful that as the economy turns positive, many of these ‘new’ investment strategies will once again be shelved in exchange of ‘buy-outs’.
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