Rhea invests in Vakif Venture Capital, focuses on private equity

Rhea Investments, an Istanbul-based private investment firm, has agreed to buy 31.15 percent of Vakıfbank's private equity operation Vakıf Venture Capital Investments Trust.

The 2.1 million Turkish Liras deal is pending the approval of Turkey's Capital Markets Board, or SPK, and is likely to be finalized by the end of 2009. Vakıf Venture Capital Investment Trust was established in 1996 and listed on the Istanbul Stock Exchange in July 2000.

Memet Yazıcı, head of asset management at Rhea Investments, said the merged private equity house would focus on investing in four key sectors in Turkey, which are attractive also for international institutional investors.

"There are several growing sectors in Turkey, which are also important for the economy of the region around it. Health care is one sector that has become increasingly important, as there have been many changes in health care in Turkey in the past five years. Energy is another important field – Turkey being rich in all energy sources other than petroleum. There are also good investment opportunities in telecommunications, and financial services is also an industry that will grow in the future," Yazıcı said.

Funding ambitious growth plans

Cem Baytok, director at Rhea Investments, said the merged investment firm would focus on supporting the growth of small- and medium-sized Turkish firms with business volume from $5 million to $100 million. "What is important is their professionalism, know-how and business approach.”

Private equity investments are becoming increasingly attractive diversification tools for institutional investors in Turkey and overseas. “It is estimated that private equity funds around the world manage some $2.5 trillion. The sector continues to grow, especially in Turkey. The worldwide private equity funds are expected to reach $3.5 trillion by 2015," Baytok said.

"We will be particularly interested in cooperating with sector leaders, firms that are already first or second in their respective sectors, which have an ambitious global growth vision. Our goal is to grow the firms and exit them in some two to four years, like an average private equity investor would do," Yazıcı said.

Rhea has already screened some 25 firms looking for an investment between 5 million and 20 million euros. "In addition to this, motivated by the construction of technoparks in Turkey in recent years, we are also planning to build a technology portfolio of some five companies," said Onur Takmak, Rhea Investment venture capital director.

Several international institutional investors, including pension funds from North America and Continental Europe are among the potential investors at Rhea private equity fund in Turkey, Takmak said.

"The world is getting over the finance crisis and investor appetite is returning. This is the market we want to play an active role in," Takmak said.