January 2023

Economic & business news from Türkiye

Fusacq operations amounted to 86.2 billion TL in Türkiye in 2022

Last year, 89 mergers, acquisitions and privatization operations were carried out in Türkiye for a total amount of TL 86.2 billion. Excluding privatizations, the total amount of transactions amounted to 72.2 billion TL. All parties were of Turkish origin for 39 transactions, Turkish and foreign for 34 transactions and all of foreign origin for 9 transactions. With 8 operations with a total value of 8.35 billion TL, the field of “production, transmission and distribution of electric energy” was the first sector of investment. The total amount of transactions carried out by foreign investors reached 43 billion TL for 36 operations, or 50% of the total value of transactions. Foreign investors from the Netherlands and the United Arab Emirates come out on top with 5 operations each.

Source: Competition Authority of Türkiye, January 2023

Turkish government allocates 121.7 billion TL to transport and communications sector

The Turkish government has unveiled its 2023 investment program. It plans to allocate a total budget of 454.2 billion TL to develop a total of 10,915 projects. A total amount of 121.7 billion TL will be allocated to the Ministry of Transport and Communications, or 26.8% of the investment program. This is the largest share allocated to a ministry.

• The largest share of this budget was granted to rail transport which absorbs 61.0 billion TL, or half of the ministry's budget.
• 29.5 billion TL will be invested in road projects
• 18.6 billion TL were allocated to #urban transport including 8 million TL to the Ministry of Environment, Urban Planning and Climate Change
• 6.7 billion TL was granted to air transport
• 1.9 billion TL will be invested in maritime transport
• The flagship projects in transport mainly concern the development of rail lines, in particular the projects below which will receive a substantial budget:
• Izmir-Ankara: 8.6 billion TL
• Bandırma-Bursa-Yenişehir-Osmaneli: 4.7 billion TL
• Mersin-Adana-Osmaniye-Gaziantep: 4.2 billion TL
• Ankara-Sivas: 2.4 billion TL
• Konya-Karaman-Niğde-Mersin-Adana: 2.3 billion TL

Source: Haber Döviz, January 16, 2023

Turkish SASA to invest USD 20 billion in petrochemical facilities

Türkiye's SASA Polyester, a leading global manufacturer of polyester, fibers, polyester-based polymers, specialty polymers and intermediate components, has unveiled its roadmap for its massive USD 20 billion investment project in construction of petrochemical facilities in Türkiye. Investment planned within the Yumurtalık Special Zone in Adana (Southern Türkiye), the project will be carried out in 3 major phases over the next 10 years.

The first stage includes the construction of a paraxylene and aromatics production plant with a capacity of 2 million tonnes as well as the construction of a port. It also includes a propylene plant (PDH plant) whose construction has just been completed in agreement with the American Honeywell UOP. The plant will have a capacity of 1 million tonnes/year and is expected to be completed in the first half of 2026. The contribution of this planned investment to revenue is expected to be USD 1.2 billion and its value to be USD 1.5 billion .

The second stage includes a PDH and polypropylene production plant with a capacity of 1 million tonnes, SAP production facilities with a capacity of 200,000 tonnes, 2-EH with a capacity of 100,000 tonnes , ACN with a capacity of 300,000 tonnes, PTA with a capacity of 1.6 million tonnes and MEG with a capacity of 700,000 tonnes. The third and final stage, planned to be finalized in 2032, includes integration with the 12 million tonne capacity SASA Polyester refinery.

The first constructions will begin in H2 2023. Thanks to this investment, Türkiye will cover 40% of its propylene needs, currently imported in full (2.5 million tonnes imported annually).

Source: Ekonomim, January 19, 2023

Huawei inaugurates its 2nd R&D center in Türkiye

A subsidiary of the Chinese ICT leader known for its smartphone brand, Huawei Turkiye is inaugurating its second R&D center in Türkiye. Located in Ankara, the site will accommodate 50 engineers and researchers. The research projects will focus on AI and next-generation wireless communication systems.

The smartphone brand's plans for Türkiye do not stop there. For the year 2023, it aims to increase the staff of its new Ankara center, which should reach 150 people, and the creation of a third R&D center in Izmir.

To date, Istanbul is home to the second largest European R&D center of the Chinese group. It has five laboratories with more than 65 engineers and researchers. The Turkish smartphone industry has grown greatly in recent years, especially during the post-pandemic economic recovery. Several Asian manufacturers (Samsung, Xiaomi, Oppo, Tecnomobile, TCL, Realme, Vivo and Omix) have chosen to open a production site on Turkish soil in order to get closer to the European market and the Middle East.

Source: Ekonomim, December 30, 2022

Swedish Lesjöfors acquires Turkish Telform

The Swedish company Lesjöfors, an international manufacturer of standard springs and custom springs, has signed an agreement to acquire 100% of the shares of Turkish Telform. With this acquisition, Lesjöfors expands its international production coverage and increases its low-cost manufacturing capabilities in line with the group's overall strategy. In addition, this operation opens a new market with growth potential and well positioned to benefit from the nearshoring trend, according to the Swedish group's press release.

The Lesjöfors group is a firm with an international dimension: it is part of Beijer Alma, a company listed on the stock exchange. It has nearly 40 manufacturing and sales companies around the world. Its turnover reached more than 300 million EUR in 2021.

Turkish Telform has 140 employees for an annual turnover of around 11 million EUR. The company exports to more than 30 countries and serves multiple sectors such as household appliances, construction, and automobiles.

Source: Beysad, December 2022

Whirlpool & Turkish Arçelik join forces on the European market

The American giant Whirlpool sells most of its EMEA operations and forms a new entity with the Turkish Arçelik in the European household appliances market. Arçelik subsidiary Ardutch B.V and Whirlpool subsidiary Whirlpool EMEA Holdings have signed an agreement that will see both companies transfer their European subsidiaries to a new entity. It is planned that 75% of the newly formed company will be owned by Ardutch B.V. and 25% by Whirlpool.

The companies will combine their manufacturing expertise, European home appliance brands, supply chains, distribution and sales networks and commitment to sustainability and product innovation. The agreement includes Whirlpool's 38 European subsidiaries and 9 production sites located in Italy, Poland, Slovakia and the United Kingdom, as well as Arçelik's 2 production sites in Romania and 25 European subsidiaries, giving a capacity of combined production of approximately 24 million products per year.

The new entity will manufacture, market and provide after-sales service for Arçelik branded appliances (Grundig, Arctic, Elektrabregenz, Flavel and Leisure) alongside Whirlpool's existing brands (Indesit, Hotpoint, Ignis, Privileg and Bauknecht). The company will also hold regional brand rights for Arçelik's Beko, Blomberg and Altus brands and the Whirlpool brand for a period of 40 years.

Source: Appliance Retailer, January 19, 2023

Alibaba reportedly plans to invest more than USD 1 billion in Türkiye

Chinese e-commerce giant Alibaba is considering investing more than USD 1 billion in Türkiye in the logistics and cloud sector, according to the group's executives, who came to Türkiye in early January to assess investment opportunities. Alibaba would therefore consider establishing a logistics base in Istanbul airport, which would allow it to develop e-export projects from Türkiye to Europe, the Middle East and the Far East.

The group is also reportedly considering establishing Türkiye's largest data center on an area of ​​200,000 m2 in Ankara. According to Michael Evans, President of Alibaba, while some countries only have consumption power, Türkiye is both a major production and consumption power and is therefore an “extremely advantageous” country. It is this particularity which pushed the group to acquire the e-commerce site Trendyol in 2018, recalls Mr. Evans, who sees Türkiye as the center between Europe and the Middle East.

Source: Sabah, January 8, 2023

1.6 billion USD invested in Turkish start-ups in 2022

According to Startups.watch data, USD 1.6 billion was invested in Turkish startups in 2022 through 300 transactions. Adding investments made in Turkish companies abroad, this figure reaches 1.74 billion USD. Apart from the mega-deals of Getir, the home delivery company, which has dominated the ecosystem for two years, the start-ups received an investment equivalent to USD 825 million. Still excluding Getir operations, 54% of investments were made in mostly gaming and fintech startups.

The next largest areas of investment were in the areas of artificial intelligence, SaaS and marketing technology. The Metaverse was the fastest growing sector, up 700% from the previous year.

1 in 5 transactions was carried out by foreign investors. This year again, Türkiye maintains its place in the Super League ranking (investment of 1 to 10 billion USD) which includes countries like Italy, the Netherlands and Sweden by positioning itself in 10th place at the European level while that Istanbul climbs from 13th to 6th place among European cities and climbs behind London, Paris, Berlin, Stockholm and Munich.

Türkiye has also become the 4th country to have attracted the most investments in games after the United States, Singapore and the United Kingdom, while the city of Istanbul ranks 5th globally and 2nd in the world. European scale just behind London.

Source: Habertürk, January 22, 2023

Istanbul Airport was the busiest in Europe in 2022

According to Eurocontrol data, Istanbul Airport ends the year 2022 on the European podium with the highest attendance in terms of number of flights on the entire continent. Istanbul Airport welcomed 1,156 daily flights in 2022, narrowly ahead of Amsterdam Schiphol Airport which has a total of 1,140 daily flights. Frankfurt lost 362 daily flights compared to 2019 and fell from first to fourth position. Paris CDG and London Heathrow complete the top 5.

Meanwhile, Turkish Airlines is on the 2022 list of the top 10 airlines recording 1,245 daily flights. Ryanair tops the list with a daily average of 2,356 flights, and EasyJet ranks second with an average of 1,335 daily flights.

The year 2022 was a year of recovery for European aviation, ending with 9.3 million flights, i.e. +3.1 million more than the previous year but remaining below the figures for 2019 (+11 million flights ).

Source: Hürriyet Daily News, January 4, 2023

Turkish Fintechs raised USD 89.1 million in 2022

Still attractive for investors, Turkish Fintechs raised USD 89.1 million in funds during the year 2022, or +31.6% compared to the year 2021. These results are more than surprising in view of hindsight global investments recorded this year in financial technologies: USD 75 billion in 2022, compared to USD 115 billion in 2021.

Alongside the gaming industry, Fintech is the driving force of the Turkish startup ecosystem. It has around 600 companies active in Türkiye. The industry that combines technology and finance today covers payment technologies, banking, blockchain and cryptocurrencies. Large Turkish banks are now among the investors, sometimes even the buyers. This is the case for Türkiye İş Bankası and Fibabanka, which both own a Fintech. Most recently, the Saudi PayTabs announced the acquisition of the Turkish Paymes for an undisclosed amount. The Turkish application will serve as a social commerce platform for freelancers, artisans and self-employed people in the MENA region.

Source: Dailysabah, December 28, 2022

Turkish Karçel, in charge of building the BMW factory in Hungary

Karçel A.Ş., a subsidiary of the Turkish Kardemir, won the lot for the construction of the metal framework and will be responsible for the assembly work of the next factory of the automobile giant BMW Group which will be located in Hungary. This will be the largest tonnage structural steel manufacturing and assembly project ever carried out in Hungary in one go. A project carried out for one of the largest automobile manufacturers in the world and within the EU, this project is of particular importance for Karçel, symbolizing the expertise and quality of its services in the construction of industrial buildings.

Karçel is in fact a pioneer company in the establishment of shipyards, ports, dams and petrochemical installations as well as factories. Export studies are also continuing for potential new projects in Europe and the Balkans. Founded in 1966, the Karçel company has one of the largest steel construction factories in Türkiye (66,000 m2 including 36,000 m2 of closed space). It ended 2022 with a record production of 22,412 tonnes.

Source: Anadolu Agency, January 5, 2023