16 th Annual Syndications and Co-financiers Meeting at the EBRD Turkey: Political Uncertainties Impact on Investment Climate March 2014 Nadia Petkova Senior Banker Head of Agribusiness for Turkey and the Caucasus
Outline I. EBRD in Turkey II. Project Examples in Turkey III. Political Uncertainty IV. Economic Instability V. Investment Climate Impact 2
EBRD in Turkey Operations began in Turkey in 2009 Initial focus on sustainable energy, MSMEs, agribusiness and utilities. Portfolio Breakdown 2009-2013 (Cumulative) The EBRD began operating in Turkey in 2009 and by the third quarter 2012 had (MSMEs) in remote regions, agribusiness, improving utilities to residents outside of the main urban centres and support for privatisation Number of projects : 118 Net business volume : 3.5 billion In 2013 Business Volume Net business volume: 920 million Number of projects : 36 3
Sustainable Energy Financing Facilities (SEFFs): From Disbursement to Projects TurSEFF: USD 280 mln facility (including USD 50 mln from the Clean Technology Fund) geared towards residential, commercial and SME energy efficiency investments and small renewables (loans up to USD 5 mln); Achievements since June 2010: USD 200 mln disbursed in 210 projects with a total value of USD 360 mln; 170,000 toe saved (equivalent to USD 110 mln in oil imports) and 430,000 tonnes of CO 2e per year abated. MidSEFF: EUR 1 billion facility aimed at scaling-up Sustainable Energy (RE, EE & WtE) investments (up to 50 mln); EU-funded Technical Assistance for banks and sponsors, to apply EBRD-EU environmental standards. Achievements since April 2011: EUR 330 mln disbursed in 18 projects (7 small HEPP, 6 WEPP, 3 GEPP and 2 EE) for a total value of EUR 490 mln; 350 MW installed (820 GWh RE produced or EUR 65 mln in electricity generation per year) and 500,000 tonnes of CO 2e per year abated. 4
A snapshot of the syndicated deals done by the EBRD in Turkey Deal name Amount EBRD portion Syndicated/Clu b portion Sutas EUR 50m EUR 25m EUR 25m Ulker EUR 45m EUR 22.5m EUR 22.5m Ford Otosan EUR 150m EUR 60m EUR 90m Turk Traktor EUR 75m EUR 30m EUR 45m Tiryaki USD 250m USD 50m USD 200m Izgaz TRY 200m TRY 130m TRY 70m Rotor Wind Farm EUR 130m EUR 45m EUR 85m Sedas USD 355 m USD 100m USD 255m Bares EUR 130m USD 100m EUR 30m Energaz USD 175 m USD 50m USD 125m TAV Ege EUR 145m EUR 70m EUR 75m Eurasia Tunnel USD 960m USD 150m USD 810m Asya Port USD 268m USD92m USD176m 5
Tiryaki (2012, 2014) Founded in Gaziantep, Tiryaki is the largest Turkish agro-commodity trader / processor. First privately owned licensed warehouse in Turkey. Sales of USD 1.2 billion in 2012 with approx. 50% export share. JV partner of Ülker EBRD Finance: USD 50 million working capital loan (March 2014) part of USD250m club deal lead by ABN. USD 25 million equity investment (June 2012) alongside Investcorp private equity. European Bank for Reconstruction and Development 2012 www.ebrd.com 6
Sütaş (2013) Sutas is one of the leading dairy producers in Turkey. The loan supports Sutas 2013/15 investment programme which includes a regional expansion through the construction of two milk processing plants and dairy farms in Western and Eastern Turkey as well as capex investments and the provision of working capital for the subsidiaries in FYR Macedonia and Romania. EBRD Finance: EUR 50 million long-term loan (October 2013) A portion EUR 25m This loan is the first deal with an international financial institution for the company, and the first dairy deal for EBRD in Turkey. European Bank for Reconstruction and Development 2012 www.ebrd.com 7
Ford Otosan- Turkey (2010) Ford Otomotiv Sanayi A.S is incorporated in Turkey for the manufacturing and selling of motor vehicles and parts. The Company operates as a joint venture between Ford Motor Company and Koc Holding 41% equity stake each. The rest of the shares are listed on the Istanbul Stock Exchange. Project Cost: Up to EUR 485 million EBRD Finance: Up to EUR 150 million long-term loan, of which up to EUR 60 million will be for the account of EBRD and up to EUR 90 million will be syndicated to commercial banks. (Oct 2010) 8
Bares Wind Farm, Turkey (2012) Bares Wind Farm, a 142.5MW wind farm of Enerjisa Enerji Uretim A.S., a joint venture between Sabanci Holding A.S. and Verbund International Gmbh and a leading vertically integrated electricity provider in Turkey. Project Cost: EUR 212.5 million EBRD Finance: EUR 100 million financing (Apr 2012) 9
Building a more sustainable airport through Public Private Partnership (2012) Construction of a new domestic terminal; operation and maintenance of both the domestic and the international terminals at Izmir Adnan Menderes Airport until 2032 for TAV Ege, a project company owned by TAV Airports. Project Cost: EUR 444 million EBRD Finance: EUR 145 million senior loan, which consists of EUR 70 million A loan, and EUR 75 million B loan (Nov 2012) 10
Gaziantep Municapality Compressed Natural Gas (CNG) Buses Project (2011) The loan to the City of Gaziantep finances up to 50 new low floor CNG buses, maintenance equipment and CNG filling station. The investment constitutes the next priority of the City to start essential public transport integration by providing feeder bus lines to the newly launched light rail transit system. The project focuses on further public transport integration through development of a new transport master plan, revision of the existing route scheme, tariff reform and integration of remaining operators into the ticketing system through robust Public Service Contracts. EBRD Finance: Senior loan of up to EUR 12 million to the City of Gaziantep (Nov 2011) 11
Recent Events Impacting the Political Climate May 2013 Gezi Park Events Dec 2013 Corruption and Bribery probe Feb/March 2014 Wiretapping IV. March 2014 Local Elections V. October 2014 Presidential Elections 12
which have lead to Economic Instability Inflation has crept up Feb 14 CPI 7.9%; YE estimates up to 9% FX - TRY has lost almost a quarter of its value during the last year GDP growth has slowed down to 0.9% and 1.6% in 2012 and 2013 y-o-y, respectively. IV. Most of the public and private debt is in FX and predominantly short-term. V. Current account deficit has reached 7.5% in 2013. 13
and impacted negatively the Business Climate Scaring FDI away Resulted in delays in projects especially in the infrastructure, power and municipal sectors Business has taken a wait and see approach no major capex undertaken or on hold until at least local elections Syndication deals delayed or on hold Impact on tenors and pricing of FX loans. 14