Abraaj moves into Turkish banking with Fibabanka acquisition

Private equity deal activity has dropped off in Turkey due to rising political uncertainty, security concerns and a struggling currency, which make it harder to lure new investors and exit investments profitably.

However, Abraaj’s move to buy a 9.95 percent stake in Fibabanka comes days after British private equity firm Bridgepoint bought Turkish dried fruit and nuts producer Peyman in a deal sources said was worth some $110 million.

Fibabanka will use the investment by Abraaj, which has about $9 billion in assets under management, to expand its franchise and support its growth, Abraaj said in a statement.

Details of the Fibabanka deal were not disclosed, although Abraaj said that following the investment it will have deployed around $900 million of capital in Turkey since 2007.

“The Turkish banking sector loan book has increased tenfold in the last decade, yet Turkey remains an under-leveraged market with a household debt to GDP ratio that is approximately a third of the Eurozone average,” said Selcuk Yorgancıoğlu, Partner and Regional Head of Turkey and Central Asia at The Abraaj Group.

“The country’s young and rising middle class continues to fuel demand for loan products and Fibabanka is well-positioned to expand in the market.”

Established by leading Turkish businessman Hüsnü Özyeğin in 1987, the Fiba Group is also involved in real estate, retailing, hotel management and energy.

Fibabanka was acquired by Fiba Group in 2010. It currently has 70 branches across 18 cities in Turkey, total assets of $4.3 billion and a loan book of $3.2 billion at the end of first quarter of 2016, the statement said.

The bank’s focus was on commercial, corporate and SME customer segments, it said.

The European Bank for Reconstruction and Development (EBRD) and World Bank Group’s IFC both have 9.95 percent stakes in Fibabanka.

Turkish merger and acquisition activity has also been subdued, with only 41 transactions in the first four months of this year in the country, according to data from Ernst & Young, the lowest level since 2009, during the global financial crisis.