May 2024

Economic & business news from Türkiye

Turkish Airlines & Rolls Royce Partnership

Turkish Airlines, Airbus and Rolls-Royce gathered at the Turkish airline's headquarters in Istanbul to commemorate the historic order for 150 A321neo and 80 A350 family aircraft placed in December 2023. The agreement made Turkish Airlines the largest customer of the Airbus A350 family in the world and in fact the largest operator of the Rolls Royce Trent XWB engine family (the order includes 120 Trent XWB-84 engines and 40 Trent XWB-97 engines, excluding options and spare parts). spare).

The event not only celebrated this significant aircraft order, but also marked the introduction of Turkey's Strategic Enhanced Program (STEP), a collaboration initiated by Airbus, Turkish Airlines and Turkish aerospace companies. This program aims to propel the Turkish aerospace industry forward, in line with Turkish Airlines' long-term strategic growth plan, generating substantial economic value over the next 15 years.

As part of Rolls-Royce's long-term strategy and commitment to Turkey, the British engine manufacturer is exploring the implementation of a number of industrial initiatives including the potential development of a competitive maintenance capability, repair and overhaul (MRO) and more advanced #supply of the supply chain. Rolls-Royce believes that these projects could have a significant positive impact on the Turkish economy in the years to come. Rolls-Royce already has a well-established relationship with the Turkish aerospace supply chain. Following the agreement, Rolls-Royce will work in partnership with several suppliers to explore the expansion of its supply activities.

Source: Rolls Royce, April 29, 2024

Attractiveness of foreign investments: Turkey is 4th in Europe

Turkey climbed in the European ranking of the number of foreign investment projects hosted, going from 7th place in 2020 to 5th in 2022, then to 4th in 2023 with 375 FDI ​​projects, a significant increase of 17 % year-on-year. It ranks behind France, first in the ranking, the United Kingdom and Germany. It has also become the leader in terms of increase in the number of projects hosted among the top 10 European countries last year.

Turkey's evolution in this ranking is all the more significant as Europe is experiencing a decline in FDI projects for the first time since the Covid-19 pandemic, attributed to various factors such as low economic growth, high inflation and geopolitical risks. Indeed, the number of investment projects announced in Europe last year reached 5,694, down 4%. This keeps Europe 11% below its 2019 level and 14% below the 2017 peak before the pandemic.

Although FDI projects in services declined significantly on the old continent, the decline in the manufacturing sector was limited to 1%. In contrast, Turkey has managed to attract more manufacturing projects thanks to the restructuring of supply chains and its relations with neighboring countries. Indeed, Turkey has become an attractive destination for investors due to its strategic location and strong investment environment; it welcomed 10.6 billion USD in FDI in 2023.

Source: Anadolu Agency, May 3 and 4, 2024

Labeau invests in a new laboratory in Türkiye

Labeau has launched the construction of a cutting-edge laboratory in Turkey in the Çanakkale (Gallipoli) region in the west of the country. The laboratory will be dedicated to the propagation of phalaenopsis, or the multiplication of orchid flowers. It is expected to propagate between 25 and 30 million Phalaenopsis plants, which will make the Turkish center the Labeau group's largest laboratory. This site is the group's sixth Phalaenopsis tissue culture laboratory, following facilities in Germany, Belgium, America and Slovakia and is expected to be operational in February 2025 with 200 employees.

The Labeau group is the result of the recent merger between Hark/Sion and Microflor, giants in the global plant industry. Microflor, based in Belgium, has been growing and propagating Phalaenopsis, Gloxinia and Helleborus for over 30 years, while Hark/Sion, born from the merger of Hark Orchideen (Germany) and Sion Young Plants (Netherlands), operates globally. in plant propagation, with particular expertise in Phalaenopsis.

Source: Hort News, April 18, 2024

Flormar: The Rocher Group hands over

A group of private investors makes a major investment by purchasing the Turkish cosmetics brand Flormar from the French Groupe Rocher which held 51% of its shares since 2012. The investment was made by Esas Private Equity, a division of Esas Holding in partnership with Tacirler Portföy / Asset Management and the private venture capital fund Credia Partners. With this strategic acquisition, the aim is to accelerate Flormar's global growth and achieve a stronger position in the international market. The company aims to strengthen its leading position in the cosmetics sector through its investments in R&D activities and its product development strategy that closely follows trends. Ultimately, the goal is to add value to the company to present it to a new strategic investor or by making a public offer.

Flormar is an international cosmetics and beauty brand founded in 1950 in Milan which moved its headquarters to Istanbul in 1970. The brand is present in more than 100 countries and 200 cities. It is the leading brand on the Turkish market.

Esas Private Equity has significant investments in its portfolio (Pegasus Airlines, Korozo Ambalaj, Ayakkabi Dünyası, MACfit, Insider and OPLOG). Tacirler Portföy is a company that provides professional portfolio management services and Credia Partners, founded by investment bankers in 2015, operates in the areas of corporate finance consulting, private equity and credit investments.

Source: Bloomberg HT, May 25, 2024

Reborn Coffee acquires Turkish Derin Lezzetler

Reborn Coffee, a California-based provider of high-quality specialty roasted coffees, announced the signing of a Letter of Intent (LOI) to acquire a 55% majority stake in Derin Lezzetler, a leading artisan coffee producer. frozen snacks and bakery products based in Istanbul. This strategic move marks a major milestone in Reborn Coffee's expansion into the health food market, as well as its plans for increased penetration in the United States, Europe, Middle East and Asia regions. Peaceful.

Since its establishment in 2015, Derin Lezzetler has been at the forefront of producing high-quality artisan snacks. It is recognized for its high-quality, health-friendly products, including gluten-free, vegan, raw, ketogenic and no added sugar snacks. The company has developed a strong distribution network, collaborating with globally recognized brands such as Starbucks, Caffe Nero, Gate Plus, Costa Coffee, Migros, Shell, Espressolab and Coffy, making its products available worldwide.

Derin Lezzetler’s expertise in developing and distributing gluten-free and on-the-go products complements Reborn Coffee’s commitment to health and quality. This letter of intent aligns with Reborn Coffee's vision to enhance its product offerings and meet the evolving needs of its customers. Once completed, this acquisition will allow the US company to leverage Derin Lezzetler's established relationships and expand its presence in the global and US market.

The strategic acquisition will also aim to improve the product range, maintain high food safety standards and pursue innovation to meet the needs of health-conscious consumers across the world.

Source: Globe Newswire, May 21, 2024

New center for Mercedes in Türkiye

Mercedes-Benz Otomotiv announced the opening of a spare parts logistics center in Turkey with an investment of 210 million TL. With the inauguration of this new center, Turkey has become the third country to use the high-tech warehouse management system developed specifically for Mercedes-Benz.

Located in Gebze (East Istanbul), the center has a closed storage area of ​​15,000 m2 and an optional area that will allow additional growth of 7,000 m2. It will provide additional jobs for 100 people.

Equipped with the latest technologies, the center intends to minimize its environmental impact by adopting pioneering practices in areas such as energy efficiency, waste management and carbon footprint reduction. It will also produce its own electricity thanks to the installation of solar panels.

Source: Steel Radar, May 3, 2024

Finalrentals enters the Turkish market

Finalrentals, a Welsh company based in Cardiff, has signed a contract with Turkey at the world's largest travel fair, ITB Berlin, to offer its car rental booking platform. This tool allows users to compare vehicle rental prices from different companies in a selected region.

The global car rental industry is growing faster than the automobile industry. While USD 85 billion in car rental transactions took place globally in 2017, it is estimated that this figure will reach USD 106 billion this year.

Turkey is one of the fast-growing countries. While the vehicle rental market reached TL 6.2 billion in 2023, the market size is expected to almost double this year to TL 11.4 billion. The number of rented cars also broke a record by surpassing 1.2 million last year, up 57% year-on-year. This booming sector is attracting the attention of both local and foreign companies such as Enterprise, York Car Rental, Europcar, Hertz and National, already present in the Turkish market.

The Welsh company plans to provide services in major cities like Istanbul, Ankara and Bursa, but also in tourist destinations like Dalaman. Its goal is to create a network of more than 500 cars across Turkey and achieve a turnover of £5 million, or around TL 200 million, in 5 years. With Turkey, the company, founded in 2019, now operates in 37 countries in Europe, North Africa, America, the Caribbean as well as the Gulf countries.

Source: Dünya, May 15, 2024

Barcelo invests 400 Mn USD

As part of its global expansion strategy, the Spanish hotel group Barceló Hotel Group is intensifying its development in Turkey, the Middle East and Africa this year through an investment of more than 400 million USD.

Already present in Turkey, the Spanish group manages and operates three establishments there: the Barceló Istanbul and the Occidental Taksim in Istanbul, as well as the Occidental Ankara. In May 2024, the hotel chain plans to open a fourth 5* hotel under the Barceló brand in the tourist region of Cappadocia and intends to explore #investment opportunities in urban travel destinations including Izmir, Bursa, Konya, Antalya and Bodrum. The choice to expand its activities in Turkey is not random, Turkey is in fact one of the most popular tourist destinations in the world. In 2023, it welcomed more than 57 million tourists, placing it 6th among the most visited destinations in the world.

In the Middle East, the company will expand its portfolio by launching its first property in Manama, Bahrain, in the second half of 2024. In the UAE, the Occidental Al Jaddaf in Dubai will undergo a revamp under the hotel “ Barceló.” In Africa, Barceló Hotel Group will launch its Occidental Hotel & Resorts brand in Morocco and will devote more than 85 million USD to the acquisition and renovation of two 5* hotels.

Source: AGBI, May 13, 2024

Energy transition: Turkish-Chinese agreement

Turkey and China have signed a memorandum of understanding (MoU) to cooperate in the field of energy transition. The agreement was signed during Energy Minister Alparaslan Bayraktar's visit to China, where he met with his Chinese counterparts and officials.

The discussions focused on opportunities that would make it possible to promote the joint work of the two countries, particularly in the areas of nuclear energy and renewable energies. The parties agreed to develop their existing and potential cooperation in the areas of natural resources and mining, in particular critical minerals and rare earth elements, in their respective countries and in third countries.

The Turkish minister also spoke with Chinese private players and assessed conventional reactors and small modular reactors that could be built in Turkey.

He also discussed the different investment models for establishing a battery storage factory in Türkiye.

Source: Hürriyet Daily News, May 22, 2024

Nuclear energy: Sino-Turkish partnership

As part of the visit of the Minister of Energy and Natural Resources to China, discussions focused on the importance of strengthening energy cooperation between the two nations. Concrete measures were discussed during the meetings, in particular the possibility of signing a framework agreement on mining cooperation but also concerning cooperation in the nuclear field.

Indeed, nuclear cooperation occupies a central place in this collaboration. Since 2016, Turkey and China have been negotiating the construction of four nuclear reactors in Thrace in the northwest of the country, a strategic region for energy consumption. Discussions are ongoing and an intergovernmental agreement should be signed in the coming months. If this agreement is signed, it will represent a significant partnership for both countries, marking an important milestone in the development of Turkey's nuclear infrastructure and strengthening energy ties between Turkey and China. China is in fact a world leader in renewable and nuclear energies, counting among the largest builders of new reactors.

In order to meet its growing demand for energy, reduce its energy dependence and reduce negative impacts on the environment, Turkey has decided to use nuclear energy. In this context, the Akkuyu project, located in the province of Mersin, illustrates this approach towards the country's energy autonomy. Resulting from a 2010 intergovernmental agreement between Russia and Turkey, this project is led by Rosatom. The plant is expected to cover around 10% of Turkey's electricity needs by 2028.

Source: TRT Haber, May 24, 2024

1 billion USD in financing from the World Bank

The World Bank has signed a USD 1 billion program with Turkey to accelerate renewable energy development initiatives in the country. This financing includes USD 657 million in loans from the International Bank for Reconstruction and Development EBRD, USD 30 million from the Clean Technology Fund and USD 3 million in grants from the World Bank's Energy Sector Management Assistance Program. . Additionally, the program is expected to mobilize USD 259 million in private capital.

This funding will support the creation and expansion of Turkey's solar energy market and drive a battery storage program. The Public Development and Investment Bank of Turkey together with the Private Industrial Development Bank of Turkey will lead the implementation of the program, focusing on the development of the local distributed energy market in two phases. First, these banks will provide direct loans to private developers of rooftop and ground-mounted solar installations, targeting commercial and industrial customers. They will then help other local commercial banks or leasing companies offer similar loans to solar developers.

In March, Turkey won support from the EBRD to launch a new initiative to decarbonize its hard-to-abate sectors like steel, cement, aluminum and fertilizers. The country has committed to reaching a target of net zero emissions by 2053, making industrial decarbonization imperative. Investments of more than USD 70 billion will be needed to decarbonize the four selected sectors, representing a reduction of 135 million tonnes of CO2 per year.

Source: AGBI, May 17, 2024