Foreign investors starting to ask ‘how far is Istanbul from Syria?’

Hülya Güler - ISTANBUL

REUTERS photo

Turkey suffered a drop in mergers and acquisitions (M&A) last year of around $7 billion from the year before, as foreign investors start to be spooked by the country’s exposure to unrest from neighboring Syria, according to a new report by Ernst & Young (EY). 

The drop comes at a time when the global M&A volume hit record high levels of $5.6 trillion, according to EY. 

Mergers and acquisitions worth a total of $15 billion were made in Turkey in 2015, down from over $22 billion in 2014. Experts also expect transactions in 2016 to amount to around $15 billion. 

EY Turkey Corporate Finance Chief Müşfik Cantekinler said the global M&A volume peaked last year thanks to the recovery in the U.S. economy, but rising geopolitical risks and the relative slowdown in the Turkish economy hit such transactions in Turkey. 

“2015 was a year that was harder than we had earlier expected. Foreign investors most of all asked questions about security problems in Turkey. One of the most asked questions was: ‘How far Istanbul is from Syria?’” Cantekinler said. 

He said Turkey could return to growth of at least 5 percent if it passes the required structural reforms, maintains the rule of law, and rebuilds social peace, thus improving investment conditions. 

“Turkey’s annual M&A transaction potential would be more than $30 billion if these steps were taken. With direct investments, this figure may reach $45-50 billion,” Cantekinler said. 

The Qatari National Bank’s acquisition of Finansbank, worth around $3 billion, was the largest transaction in Turkey in 2015. Although this money was transferred to Greece as Finansbank had been owned by the National Bank of Greece (NBG), the transaction was recorded to the account of Turkey, Cantekinler stated.
 
Globally the biggest transaction was the acquisition of botox maker Allergan by pharma giant Pfizer for $191.5 billion.