EBRD makes new investment in Turkey’s largest NPL firm

By Olga Rosca
@olgarosca

EBRD makes new investment in Turkey’s largest NPL firm

Bank supports longer-term Turkish lira-denominated bond issuance by Hayat Varlik

Stepping up its efforts to support innovation in Turkey’s financial sector, the EBRD has made a new TL 6 million investment in the three-year local currency denominated unsecured bond issuance by Hayat Varlık, the largest non-performing loans (NPLs) management company in the country.

Hayat Varlık has recently merged with Turkasset Varlik Yonetim A.S., a major player in the market and a long-standing partner of the EBRD. Its latest bond issuance, structured in two tranches with maturities of two and three years, respectively, raised a total of TL 56 million to finance the company’s expansion.

The funds will enable the company to buy new distressed portfolios from financial institutions. This will contribute to a strong and efficient NPLs market and free up the potential for fresh lending to the new real economy as banks are restructuring their balance sheets and are increasing their capacity to provide new credit to businesses.

Over the past years, the Bank has invested a total of TL 61 million (€19.5 million equivalent) in four issuances of Turkasset bonds as the company has been raising finance for expansion.

Jean-Patrick Marquet, EBRD Managing Director for Turkey, said: “NPLs can slow down economic development, both at the level of lending banks and borrowing companies. By supporting NPL management companies such as Hayat Varlik, the EBRD is facilitating new lending to the economy and helping financially challenged companies to become active again.”

By investing in the longest-tenor tranche of the bond, the Bank is helping to deepen Turkish local currency and capital markets, supporting issuances of longer maturities by non-bank financial institutions, whose medium- and long-term issuances have been restricted by a number of factors relating to supply and demand and the development of the local capital market in Turkey.

Hilmi Güvenal, CEO of Hayat Varlık, commented: “With our strong shareholding structure, solid lenders, investments in advanced technology and people-focused business approach, we have reached more than 850,000 customers, built a TL 8.8 billion portfolio and hired 550 employees since 2009.

This investment once again proves the EBRD’s confidence in Hayat Varlık and the Bank’s dedication to the development of Turkish capital markets.”

The EBRD started investing in Turkey in 2009. The country is a top destination for the Bank’s finance, with €1.9 billion invested in 2016 alone. To date, the Bank has invested over €9 billion in Turkey through more than 220 projects across sectors and has mobilised nearly €20 billion for these ventures from other sources of financing. Some 98 per cent of the Bank’s investments in Turkey are in the private sector.

The EBRD invested in a 12.3 per cent stake of Turkasset in 2011 and retains its stake in the newly merged company Hayat Varlik. Most recently it has arranged a loan of TL 120 million (€36 million equivalent), half of which was syndicated to the Turkish subsidiary of the Industrial and Commercial Bank of China.

Hayat Varlik currently has close to a 30 per cent market share of its sector. It held assets of €253 million and total equity of €90 million as of the end of 2016.