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Deals outside Turkey are much cheaper and better  than Turkish opportunities.
Deals outside Turkey are much cheaper and better  than Turkish opportunities.

Slower Growth Driving Turkish Companies Abroad

Slower Growth Driving Turkish Companies Abroad

Robert Yuksel Yildirim had barely been at the family’s construction-materials business a year before the company won its first international contract. Now, it’s a conglomerate with interests in mining, ports and chemicals across 28 countries.
Twenty-four years after the deal to import coal directly from Russia was sealed, the impetus to expand Yildirim Holding AS beyond its Turkish home base is stronger than ever. The political fallout from a failed coup in July last year is hindering economic growth and making it harder for firms to operate in a market many see as saturated, cluttered with red tape and expensive for acquisitions, Bloomberg reported.
 “Deals outside Turkey are much cheaper and better than Turkish opportunities,” said Yildirim, 57, whose last purchase abroad was a port in Ecuador that his company bought for $750 million in 2016. “It is easier to deal with foreign bureaucracy than Turkish bureaucracy.”
The chairman of Istanbul-based Yildirim isn’t alone in expanding abroad. Turkish companies may spend a further $64 billion on overseas acquisitions and setting up new operations abroad by 2023, according to Volkan Kara, a partner in Bain & Co.’s Turkey office. That is after investing $36 billion in the 10 years through 2016, according to a report by Bain and Turkey’s DEIK Outbound Investments Business Council.
“There is a serious flow of investment towards developed countries, especially to the US and Europe,” Kara said . “We project annual investments to continue growing significantly.”

 Shifting Risk
Murat Ulker, a billionaire whose Yildiz Holding AS spent 15 billion liras ($4.3 billion) on overseas ventures through 2016, said he is seeing “significant opportunities” for growth in the Middle East, North America, Africa and Asia. His company made the largest investment outside Turkey to date with the 2014 purchase of Middlesex, UK-based United Biscuits Holdings Plc for $3.1 billion.
Companies are seeking to diversify earnings and spread risk after a coup attempt resulted in the detention of opposition party members and human-rights activists, causing relations to sour with Germany, the country’s biggest trading partner. Gross domestic product expanded 2.9% in 2016, the slowest pace since a contraction in 2009.
Turkish businesses are used to operating in a country which has faced several “political challenges”, said Jonathan Friedman, a director at London-based risk management consultants Stroz Friedberg Ltd. “And you manage risk by diversifying assets.”
The drive to expand abroad also comes amid a weakening Turkish lira, with the currency dropping 17% against the dollar over the past 12 months, the biggest decline among 24 emerging markets tracked by Bloomberg.

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