European development bank and ICBC Turkey in new financing for country’s largest NPL firm

ISTANBUL

In a move to support innovation in Turkey’s financial sector, the EBRD has said it is providing a syndicated loan of 120 million Turkish Liras (36 million-euro equivalent) to Hayat Varlık, the largest non-performing loans (NPL) and asset management company in the country, in a statement. 

Hayat Varlık has recently merged with Turkasset Varlık Yönetimi, previously the biggest player in the market and a long-standing partner of the EBRD. 

The funds will partly re-finance the company’s maturing debt and enable new NPL acquisitions from financial institutions in the coming years, according to the statement, which was released on March 23. 

Half of the EBRD’s loan is syndicated to the Turkish subsidiary of the Industrial and Commercial Bank of China (ICBC Turkey). As the first syndication of a loan to an NPL asset management company in the country, it will diversify Hayat Varlık’s investor base and lengthen the maturity profile of its funding base.

The investment will facilitate new lending within the economy and help financially challenged companies to become economically active, read the statement. 

This will help boost the resilience of Turkish corporates, small and medium-sized enterprises, the financial sector and the economy as a whole, it added. 

“Since 2009 we have grown to 800,000 customers, a portfolio of 8.5 billion liras and 600 employees under the Turkasset brand. The powerful combination of a robust shareholding structure, solid lenders, advanced technology and a people-focused business approach has also made us the subject of a Harvard Business School case study.  Building on these achievements, we will continue our journey as a strong new company under the name of Hayat Varlık. The syndicated loan provided by the EBRD and ICBC is an important sign of international investors’ confidence in both our company and the Turkish economy,” said Hilmi Güvenal, the CEO of the newly consolidated Hayat Varlık.

Jean-Patrick Marquet, EBRD Managing Director for Turkey, commented: “With this transaction we are broadening Hayat Varlık’s access to long-term local-currency funding. We are particularly delighted to have brought along such a major lender as ICBC to what is a new asset class for them. This a pioneering syndicated loan structure in the Turkish NPL market and we hope to attract more interest to the sector.”

Xu Keen, ICBC Turkey Chairman said: “This landmark transaction is our third joint project with the EBRD in Turkey. As the first Chinese bank active in the country, we are seeking further investment opportunities alongside leading financial institutions and large corporates to continue supporting the Turkish economy. Our goal is to become one of the major financial institutions providing long-term financing to Turkish and international investors.”

Industrial and Commercial Bank of China, the world’s largest bank, entered the Turkish financial market by acquiring Tekstilbank, a local lender, in May 2015.  

The EBRD started investing in Turkey in 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep. The country is a top destination for the bank’s finance, with 1.9 billion euros invested in 2016 alone.