The EBRD is extending a long-term funding to Tropikal, Turkey’s leading pet food manufacturer, to meet its business development plans in a fast growing niche market. The €4 million Turkish lira equivalent loan, will finance the company’s working capital needs and support the progressive growth of the business.
Tropikal, founded by the Saban and Özkaya families, started as a distributor for international pet food brands. In 2003, Tropikal became Turkey’s first domestic pet food producer as it established a dry pet food factory near Istanbul and pioneered its own product range – currently top-selling cat and dog food brands, Goody and Champion. In 2010, The Riverside Company, a global private equity firm focused on acquiring leading small and medium-sized enterprises, purchased a majority stake in Tropikal.
In 2011, Tropikal further expanded its business by enlarging its capacity and product ranges for both the Goody and Champion brands. The EBRD’s two-tranche financing of the company’s working capital will enable Tropikal to expand its business over the next few years. In particular, Tropikal plans to shorten the production cycle, optimise its working capital and further develop a business-to-business online service.
Tropikal has earned a reputation among its customers for manufacturing high quality pet food at an affordable price thanks to its in-house research and development department, local raw material sourcing, and direct control over the manufacturing process
“Although still substantially smaller than in other emerging market economies, the Turkish pet food market is a fast growing niche and the EBRD is pleased to help Tropikal take a bigger bite of it,” said Mike Davey, Director for Turkey at the EBRD, announcing the deal. “The EBRD financing will particularly contribute to strengthening linkages and standards along the food chain and stimulate a food supply that meets European quality standards,” he added.
“Besides growing our own business, we plan to to work with our suppliers to continue to provide high-quality products to the Turkish market place, while continuing to expand our export business”” said Mr Izzet Saban, CEO of Tropikal adding” This working capital facility gives us the ability to continue to grow aggressively while supporting our brands and further consolidating our market-leading position”.
Financing in Tropikal was arranged under LEF, the bilateral EBRD-Italy Local Enterprise Facility, which was established to support small and medium-sized enterprises (SMEs) by providing long-term financing in Turkey, Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Montenegro and Serbia.
Since the beginning of its operations in Turkey, the EBRD has committed close to 2.5 billion in various sectors of the country’s economy, which attracted additional investment in excess of €5 billion.