Logistics firm seeks expansion

Turkish logistics firm Balnak is planning to expand by acquiring a new company in 2010. Growth overseas will also take place in Libya and China where Balnak plans to open offices next year.

Emre Yenal, sales and marketing director at Balnak, told the Hürriyet Daily News & Economic Review that Balnak was keen to acquire a domestic company with activities matching its portfolio. Balnak completed its latest acquisition in March 2008, when it merged with İzmir Logistics Group. “We are now keen to acquire a company that is involved in sea-freight, airfreight and project business in Turkey. We are currently in the Grand Bazaar so to say, looking for an acquisition target,” Yenal said.

Forty-seven percent of Balnak shares are owned by Great Circle Capital, a U.S.-based private equity firm that also has a stake in five other logistics and transport firms in the Caspian region and Russia. Great Circle Capital set a budget of $50 million for expanding Balnak when it added the firm to its portfolio in 2007. A part of this sum, however, was already spent on the İzmir acquisition, said Yenal. Great Circle Capital is expected to exit the firm in a few years’ time. “Usually private equity investments like this have a holding period between five to seven years. This means that 2012 will be an interesting year,” Yenal said.

Libya office

The office Balnak is planning to open in Libya – either in Benghazi or Tripoli – during the first quarter of 2010 will serve the needs of Turkish companies operating in North Africa that do business in sectors from steel and cement to furniture.

“The construction projects of Turkish companies in North Africa are getting increasingly bigger, meaning more opportunities for the logistics sector,” Yenal said. “After the growth of the construction sector, local textiles industry will grow, followed by fast moving consumer goods and automobiles. Our aim is to try to become the leading logistics firm in that region,” Yenal said. At present, Balnak’s service network can provide for the transportation of goods from Istanbul to Tunisia and Morocco in six days via Spain.

Expansion in Asia

While the office Balnak plans to open in Shanghai in 2010 will focus mainly on sales and marketing, the expansion of business volume in Korea and India are also at the top of Balnak’s agenda. “A lot of goods, textiles for example, are already moving from India to Turkey, but there are some service problems. We need to find the right companies and people there. Once we have local representatives there we will be able to offer services for our customers from India to Turkey,” Yenal said. Korea is important for the automotives sector, and we envision being able to offer services from Korea to Turkey by next year,” Yenal said.

Consumer appetite to return

In 2009, the firm expects to reach the same revenue, 125 million euros, as it did in 2008. “We aimed at having a 5 percent increase in sales in comparison with last year, but I do not think we will be able to do it. We will not reach 100 percent of budget expectations by the end of 2009, but I can easily say we will be happy with this year’s results in terms of sales and profits,” he said.

“Consumers will start buying again in 2010, and are already starting to make long-term plans. The year 2010 will not be as good as 2008 and 2007 but it will definitely be better than 2009.”