Mid Market M&A in Turkey 2013
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Mid Market M&A in Turkey 2013

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The report present the analyses of M&A deals performed in mid-market in Turkey.

The report present the analyses of M&A deals performed in mid-market in Turkey.

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Mid Market M&A in Turkey 2013 Mid Market M&A in Turkey 2013 Document Transcript

  • Mid Market M&A Review 2013 2013 was a challenging and an exceptional year for Turkey . In the global arena the agenda was, appeared green grasses in some of the developed economies, revised bond buying program of FED and changed direction of money flows while increasing socialpolitical tension, war in Syria and volatile exchange rates were in the country. While the M&A activities are slowing down by number and scale globally, Turkey is experiencing a shrink in scale while keeping the number of closed deals in the same level of last year. On the shadow of political crises and hesitation of foreign investors, SME market managed to keep the M&A activity size regarding the deal number. 97 deals were closed this year, a very close size to 2012. Strategic investors are still leading the market with ongoing interest while PEs are nearly out of the segment excluding small scaled internet investments . We are delighted to observe that just within two year this study already presenting the trends in the country and SME segment successfully. Turkey’s demographic fundamentals, increasing purchasing power of middle segment and geographical position appoints the county as a key destination for investors. SMEs of the country maintain its well deserved popularity among strategic investors. Massive growth potential, pleasing profit margins and unsaturated operational efficiency puts the segment in the centre of attention. Narrowing opportunities and profit promises in the large scaled deals are also support the trend. Ongoing discussions and active interest on the SME market, considerably developed the understanding of both sides in a potential deal. We are pleased to state that, investors (especially PEs) are revising their corporate management requirements regarding the market practice while SMEs are allocating more sources on the subject. However, there is still a way to go for both SME owners and investors to have a common understanding, especially on reporting standards and management styles. SBB Capital Turkey puts its effort to back up the decrease in the gap by public seminars and publications. We would like to thank all our stakeholders for their support in putting the Mid Market report together, that enables to bring out right findings of the SME market by taking out privatizations and large scaled deals. Özge Germeyanoğlu Managing Partner Sunbelt Turkey SBB CAPITAL PARTNERS www.sbbcapitalturkey.com
  • Remarkably strong performed Turkish economy in the last global crises, is expected to grow by 4% after the year of slowdown and re-stabilizing in 2012. Turkey’s demographic fundamentals, increasing purchasing power of middle segment and geographical position attracts the investors focusing on mid and long term returns who do not effected from the recent political turmoil. In such a challenging year, SME market managed a sustained level of M&A activity while experiencing a shrink in deal sizes. 97 mid-market deals were closed in 2013. The report covers deals up to USD 50 million enterprise value. Undisclosed deals are not listed in this report. Average deal size has decreased by 38% to 8 million USD due to increasing share of small scaled internet deals. If we exclude the internet deals, the shrink was only 10%. Decreasing value of TL against USD and Euro has also effected the deal sizes in foreign exchange. 2013 can be named as the year of internet investments. PE’s and angel investors majorly focused on early-stage internet projects. ¼ of the total deals considering the deal number was on this sector. Strategic investors are dominant in the midmarket M&A deals. Once more, 70% of the acquirers have strategic motivation to buy the stakes. 52% of these investments are originated from foreign countries. Foreign companies targeting minimum risk and faster deployment prefers an acquisition or partnership with majority share to enter the Turkish market that still has a growth potential with attractive consumption figures and niche markets with low competition. It worth to mention that, only two of the foreign investor got minority share in the 2013 deals. 2012 Deal # Total deal size million USD Average Deal size million USD Foreign Investors Share # - volume Over 50% share purchase ratio Top 3 sectors www.sbbcapitalturkey.com 2013 98 97 467 383 11,6 8 %46_%53 %40 _%54 76% 72% Finance,Health, E-trade Trend IT, E-trade, Internet 2
  • Private Equities eagerly exploit the potential of the market by proactive acquisition strategies. However their existance in the Mid-market is still low. Despite, more and more PEs are established for SME market each year, the closing ratio of the deals are not as high as strategic investors. The PEs were nearly out of the mid-market M&A deals in 2013 except internet transactions. Only 10 non-internet SMEs were able to get investment from PEs in 2013, which was 19 in last year. Regardless of low number of closed deals, keen PE activity and achieved discussions directly with the companies upgraded the empathy and increase the awareness of the market dynamics for both sides. A lot of new PE funds still raised targeting SME market with higher growth rates and unsaturated market. Though SBB Capital Turkey expect the existence of PEs in mid market M&A will be much higher in the coming years. Minority 23% Acquisition 43% 50% 5% Majority 29% There has been no change in the transferred stake ratio of SME deals. 72% of the acquirers (76% in 2012) had the full or majority stake in the closed deals. 35 of the deals were 100% stake sales among 97 deals of the year. www.sbbcapitalturkey.com IT Distribution E-commerce Financial Services Fair Food Service Internet Mine Game Retail Advertising Health Technology Textile Production Agriculture Logistics Energy Other 2013 15 2 12 2 4 7 5 12 5 3 6 3 3 1 1 5 1 1 1 8 2012 5 9 9 2 8 3 4 1 5 3 9 2 4 6 6 5 3 14 Having a sector based overview; internet based operations and IT dominated the transactions. Digital game companies were also the ones that got investment trough this digital trend. It is also notable that all 3 targets in the advertising sector deals were again digital advertising agencies. In the other edge of the digital world, mining sector stood out with 5 deals which was not exists in 2012. The Fair organization buyouts originated from EU continued with increasing number of deals. Food, retail and production sectors maintained the deal number while financial service, agriculture, health and textile deals remained in modest levels. 3
  • Local investors were more active than foreigners in 2013 and lead the market with %60 share (%54 in 2012) in deal numbers. Local players were majorly invested in internet and e-commerce companies while only %8 of the foreign investments is on this segment. We have witnessed that local players started to utilize from competitor acquisitions for faster growth in the market. Keeping its M&A activity levels and strong interest of investors in such a challenging atmosphere, SME market accredited its massive potential. Deal process is getting easier as the SMEs apply professional management styles and preplanning for exit. The same also applies for investors as they got understanding of mid market dynamics and scale down their expectation levels. Despite there has been a significant shrink, still most of the funds came through EU countries where UK and Germany have the upper hand. Geographical proximity and country knowhow is the major criteria for out of boundary investments. However, USA that has global leadership in M&A transactions become the most active county by 7 deals in 2013 and seems to increase the number. Middle East is still not a dominant player in the mid market deals mainly due to deal sizes. However it worth to mention that Japan and Far East became active investors despite geographical proximity and cultural differences in 2013. In parallel with the increasing importance of Turkey acting as a regional hub as well as the rapidly growing middle segment, we expect foreign investors to remain and eager PEs to perform better on investing in SMEs in Turkey. Better performing global economy and reducing USD value of Turkish companies by the devaluation of TL will also increase the motivation of investment. However in short term political elections and the cloudy climate in emerging markets may prevent or postpone the realization of full potential in M&A deals. EU USA UAE China India Japan Korea Kuwait Malaysia Russia Saudi Arabia Tailand Singapore Hong Kong 2013 19 7 1 1 1 2 2 1 2 1 1 1 - www.sbbcapitalturkey.com 2012 30 5 2 2 1 1 3 1 4
  • For more information:: SBB Capital Partners Bayar Caddesi Değirmen Sok Derya Sitesi B2 D34 Kozyatağı İstanbul www.sunbeltturkey.com www.sbbcapitalpartners.com sunbeltturkey@sunbeltnetwork.com T:+90 216 3625276 F:+90 216 3726634 Waiver Notice This Report has been prepared for information purposes relating to M&A activities in SME sector. This Report does not purport to be all-inclusive nor to contain all the information that a prospective investor may require in deciding whether or not to invest in SME sector. Each of SBB Capital Turkey and its respective subsidiaries www.sbbcapitalturkey.com and associated companies and its respective officers, employees and agents expressly disclaims any and all liability which may be based on this Report or such information, and any errors therein or omissions there from. Transactions data presented in this report are based on information that is readily available in the public domain. SBB Capital has not conducted any research on the accuracy of the given information. Therefore, SBB Capital Turley does not accept any responsibility as to the accuracy or completeness of the data. This report does not cover capital market transactions, IPOs, real estate sales, intra-group share transfers and transactions of PE institutions within the framework of debt restructuring. Recipients of this report are not to construe the contents of this Report as legal, business, tax or other advice. Any recipient or prospective investor should not rely upon this Report in making any decision, investment or otherwise and is recommended to perform their own investigation and seek their own independent advice. 5
  • List of the Deals * # Target Sector Acquirer Country Profile 1 8digits Internet Revo Capital Turkey PE 65,0% 2 Adeo IT IT Arena Bilgisayar Turkey Strategic 47,8% 3 Ak Alev Manyezit Mine Gözde Girişim Turkey PE 38,3% 4 Akakçe E-commerce Netprice Japan Strategic 20,0% 5 Ak-tops tekstil Textile Aksa Akrilik Turkey Strategic 40,0% 6 Alpay Enerrji Energy San Leon Energy Ireland Strategic 75,0% 7 alwaysfashion E-commerce Aslanoba Capital Turkey PE 10,0% 8 Aneles Technology Informatik Turkey Strategic 99,9% 9 Arlight Production Fagerhult Switzerland Strategic 100,0% 10 Arser İş Makineleri Distribution Still GMBH Germany Strategic 51,0% 11 Artem Service Atalian Global Services France Strategic 100,0% 12 Aten Atık Service Alba Group Germany Strategic 50,0% 13 Autoking Automotive Pera Capital Turkey PE 14 Başak Depoculuk Logistics Özkardeş grubu Turkey Strategic 100,0% 15 Benal Danışmanlık Service Aswar National Group Kuwait Strategic 100,0% 16 Beyaz İletişim Retail Penta Teknoloji Turkey Strategic 100,0% 17 Beyaz kutu E-commerce Demsa group Turkey Strategic 100,0% 18 Bileşim Alternatif IT Halk Bank Turkey Strategic 76,0% 19 Bitaksi Internet Aslanoba Capital Turkey PE 20 Boni E-commerce Aslanoba Capital Turkey PE 20,0% 21 buldum buldum E-commerce Aslanoba Capital Turkey PE 20,0% 22 Burger House Food HD İskender Turkey Strategic 51,0% 23 Callus Call Centre Comdata Italy Strategic 100,0% 24 cicek.com E-commerce Ciceksepeti Turkey Strategic 100,0% 25 City Farm Food Gedik Investment Turkey PE 26 crushmania Game doğa girişim Turkey PE 27 C-section Advertising WPP Group USA Strategic Majority 28 Çan Kömür Mine Odaş Elektrik Turkey Strategic 92,0% 29 Çatı Madencilik Mine Facor Alloys India Strategic 62,0% 30 Çelik İplik Production Osis Sinai Investment Turkey PE 45,0% 31 Çepaş Madencilik Mine Grupo Gonvarri Spain Strategic 51,0% 32 Daniska Advertising Rabarba Turkey Strategic www.sbbcapitalturkey.com Stake 66,0% 6
  • 33 daybuyday E-commerce Hepsiburada Turkey Strategic 100,0% 34 Deksarnet Communication Superonline Turkey Strategic 100,0% 35 Dent İstanbul Health Individual Turkey Strategic 100,0% 36 Doğu Tıp merkezi Health Gulf Capital UAE PE 37 Doruk İletişim IT Individual Turkey Strategic 38 dugun.com E-commerce Aslanoba Capital Turkey PE 39 edefter Internet Revo Capital Turkey PE 40 Efa ticaret Retail C&J Clarks Overseas UK Strategic 100,0% 41 Efeler Market Retail KİM Turkey Strategic 100,0% 42 Ehil.com Internet Aslanoba Capital Turkey PE 43 Elsim Otomasyon IT Kollmorgan USA Strategic 44 Erdem Gençlik Media Euro-star media China Strategic 45 Evim.net E-commerce EBRD, Smile, 212 UK, Turkey Luxemburg, PE Evrensel 46 Madencilik Mine CLK Holding Turkey Strategic 47 Fırsat bu fırsat E-commerce Aslanoba Capital Turkey PE 48 Filotürk IT Mobiliz Turkey Strategic 49 Fit&color E-commerce Aslanoba Capital Turkey PE 50 Fortis faktoring Financial Teb factoring Turkey Strategic 51 Game Sultan Game MOL Global Malaysia Strategic Majority 52 Gastro Club Internet BIC Angel Investments Turkey PE 25,0% 53 Group 29 Food Doğuş Holding Turkey Strategic 75,0% 54 GTG Danışmanlık Service Trenkwalker Austria Strategic 20,0% 55 Güvenrehberi.com Internet Aslanoba Capital Turkey PE 56 Herry Hazır Giyim Retail Metro Ticari Turkey Strategic 32,0% 57 ICG Yatırım Financial Individual Turkey Strategic 100,0% 58 Index bildisayar IT ABC data Poland Strategic 100,0% 59 IT İnnovasyon IT Universe Capital Partner USA PE 60 incir.com Internet Aslanoba Capital Turkey PE 61 İpara IT Multinet Turkey Strategic 100,0% 62 İstanbul deri fuarı Fair UBM UK Strategic 50,0% 63 iyibilir.com Internet Doğa girişim Turkey PE 64 Joy Game Game CJ Games Korea Strategic 65 Kopuzmar Food Mediterra Turkey PE www.sbbcapitalturkey.com 30,0% 100,0% 16,6% 20,0% 100,0% 37,5% 100,0% 100,0% 100,0% 51,0% 50,0% 100,0% 7
  • 66 KRC gayrimenkul Real Estate Egeli&Co Turkey PE 20,0% 67 Kron Telekom IT Netaş Turkey Strategic 10,0% 68 Lacivert Food Doğuş Holding Turkey Strategic 75,0% 69 Latek Holding Production Şahıs Turkey Strategic 74,0% 70 Lidyana E-commerce Hubert Burda Media Germany PE 22,0% 71 Mapss Internet Galata Business Angels Turkey PE 72 Mataş Matbaacılık Printing VBG Holding Turkey Strategic 53,0% 73 Mezalluna Food Doğuş Holding Turkey Strategic 70,0% 74 Mim Su arıtma Service A.O Smith Corporation USA Strategic 100,0% 75 Netsafe IT Rhea Ventura Capital Turkey PE 76 Netsis IT Logo Turkey Strategic 100,0% 77 NGN IT Croc Russia Strategic 100,0% 78 NTSR Fuarcılık Fair UBM UK Strategic 75,0% 79 onedia Internet Revo Capital Turkey PE 80 Onur Express Retail ŞOK Turkey Strategic 100,0% 81 Parkim Cosmetics Eigenmann & Veronelli Italy Strategic JV 82 PaytoGo IT MOL Global Malaysia Strategic Majority 83 Platform Fuarcılık Fair ITE Group UK Strategic 84 Plato Grup Distribution Smith Nephew USA Strategic Majority 85 Plesanta Advertising Y&R USA Strategic Majority Polyplex Resins 86 Kimya Production Indoroma Ventures Thailand Strategic 100,0% 87 Pozitif Group Entertainment Doğuş Holding Turkey Strategic 80,0% 88 Prolab Health WVR international USA Strategic 100,0% 89 Reypa Food Food Çavuşoğlu Yapı Turkey Strategic 100,0% 90 Rultrans Production Megadyne Italy Strategic 100,0% 91 Sadece hosting IT Telecity UK Strategic 100,0% 92 Sektörel Fuarcılık Fair Deutsche Messe Germany Strategic 80,0% 93 SHR Online IT CJ Games Korea Strategic 50,0% 94 Sopsy Internet Aslanoba Capital Turkey PE 95 Şişli optik Retail Magrabi Optical Suudi Arabia Strategic 96 tasit.com Internet Aslanoba Capital Turkey PE 97 Tat Tohumculuk Agriculture Kagome Japan Strategic 30,0% 100,0% 100,0% 100,0% *Targets listed by alphabetic order . www.sbbcapitalturkey.com 8