Turkiye always has its ups and downs, according to Guleryuz Partners Partner Zahide Altunbas Sancak, who points to the coming local elections and their role as a confidence check, while also making her own bets that include technology, digital banking, and energy.
“Local elections are coming in March, so we’re seeing a bit of a holding pattern till the results are in. We still have a busy pipeline with investments and projects that can’t be put on hold,” Altunbas Sancak begins, “but we’re seeing some caution: the local elections will function as a confidence barometer for the country’s new economic approach, with a new minister of the economy and new head of the Central Bank.”
The economic climate is becoming clearer, and confidence is returning to Turkish markets, she notes, “but it’s still slow going: caution still abounds in investments, hirings, and so on,” Altunbas Sancak continues. “But the banks and several market sectors are getting ready for increased M&A activity. We’re just not sure if 2024 will be the boom year, or if it’s just a preparation year.”
Considering there is still inflation, expectations for the economy seem to include interest rates going up a bit more. “And then, hopefully, stabilizing inflation over the summer,” Altunbas Sancak notes. “But it is all connected, for better or worse,” she continues. “With the restriction on credit limits in place, the IPO market has seen huge growth in the past two years. Small adjustments to related regulation were made, with the thresholds increasing somewhat, to account for the devaluation of the lira and to prevent further risk.”
Moving on to legislation, Altunbas Sancak highlights tax changes set to impact restructuring cases and demergers. “We had tax exemptions in place for certain cases, like the spin-off of real estate properties. Those exemptions were abolished on January 1. The change will significantly affect the restructuring process,” she emphasizes.
And big news is expected for the Turkish Competition Authority. According to Altunbas Sancak, the authority has broad powers regarding on-site investigations: “They can go into workplaces and collect data or secure computers, with no prior notice. Recently, the Constitutional Court issued a decision saying that those broad powers are unconstitutional as they breach the inviolability of domicile. The CC is currently examining whether to cancel the relevant regulation in competition law. So we’ll wait and see if the authority’s power will be curtailed or not – but the impact of the former decision on concluded and ongoing investigations could be momentous.”
Another legal update was a law on short-term rentals, dubbed the “Airbnb law.” As Altunbas Sancak explains, on account of Turkiye’s touristic appeal and unpredictable circumstances, the short-term rentals of private housing saw a marked increase. “In terms of taxes, such operations had to be registered already – but from now on, they’ll have to have the appropriate permits as well.” The difficulty, according to her, “will rest with the enforcement of the new law.”
As a sign of good things to come, Altunbas Sancak points to Guleryuz Partners' work on the Tiryaki Group's USD 112.5 million financing package from the IFC, FMO, and Proparco, to finance an agro-industrial complex in Iraq’s Umm-Qasr Port, citing it as a win “in facilitating international financial collaborations that also highlights the importance of sustainable agricultural development in the broader MENA region.”
Asked to place bets on which sectors will drive the firm’s pipeline in the coming months, Altunbas Sancak says she leans “more towards strategic investments, rather than PE activity. Energy remains a solid bet, and only expected to increase,” she notes, while “the technology sector will remain strong, with moves also set to happen in digital banks.”
