THE AZERBAIJAN CONNECTION

Azerbaijan 2012 | ECONOMY | INTERVIEW

TBY talks to Fawaz Al-Issa, Vice-Chairman and CEO of Turkapital, on its investment activities in Turkey and Azerbaijan.

Fawaz Al-Issa
BIOGRAPHY
Fawaz Al-Issa joined Küveyt Türk Katılım Bankası as a member of the Fund Management Department in 1996. He was appointed Executive Vice-President in 1999. In 2008 he was appointed as the Vice-Chairman and CEO of Turkapital Holding, which was established by Kuwait Finance House.

As one of the first investment companies to come to Turkey from the GCC countries, what have been your most successful investments?

This is Turkapital's fourth year—we started operations in 2008. Given the circumstances and the environment globally, ours has been a success story. We're seeing that many of our peers, investment houses and companies operating in the same market, have lost their capital. In our case our capital has been preserved and we're growing. Over the last four years of operations we have acquired an auto fleet and leasing company, Autoland. It began in 2012 with 3,500 cars, but when we bought it in 2008, it had only 150 cars. We acquired it with a very small investment, around $1 million. We injected the capital and then grew the company. Our plans for 2012 and beyond are to grow and reach 5,000 more cars.

What about your other fields of operations?

We have established an insurance company called Neova. This is a huge challenge, but I think it will be one of the best performers under Turkapital. The company's first year of operation was 2010, and we closed the year 2010 with about TL60 million in revenues and premiums. For 2011, we closed with about TL90 million in revenues.

What's behind this success?

We have an edge and it's helping, which is that we use Küveyt Türk's branches as our sales points, but we're also accessing the other participation banks and their branches. We have signed with Al Baraka Türk, which means 150 branches, and Türkiye Finans has another 120 branches, and so on. We have almost 400 branches that Neova uses as its sales points. In addition, there are around 300-400 agents nationwide. It is this network that has yielded such incredible results.

What expectations do you have for Iskan?

İskan is another outstanding performer under Turkapital. Currently, a capital redemption is being undertaken, as we put forward 60% of the capital to buy real estate, which has now been sold. As a result, İskan is becoming a smaller real estate company that will be more focused on developing projects, and even investing in real estate projects. Its team is small, but they are well educated and have real experience in the real estate sector, with great knowledge of laws and local regulations. We have big plans for İskan in 2012. Another company we have established in Turkey is Depolar, a real estate company involved in warehouses. Its name has now changed to Kavea because we are preparing to hopefully list it on the stock exchange.

In which other countries does Turkapital have significant investment?

We use Turkey as our base, but we have been looking at Central Asia and we have acquired a shopping mall in Azerbaijan, which is performing very well. We have an office in Baku and we are looking at more assets to book and to expand. We also have an office in Tatarstan. Russia is a little bit challenging—we have been there for about three years and we haven't booked any assets. Luckily the office is small, so we don't incur many costs and we hope to see something happening in Russia and Tatarstan, especially over the next six months to a year. There is good potential, and Tatarstan will also host the 2013 World Student Games, which opens a lot of potential for development. We hadn't looked at Eastern Europe in our first four years, so we did a fact-finding trip to Bosnia and Croatia, and there are some good opportunities there. We are now studying up, but we haven't committed or decided what to do yet. However, there are some good opportunities coming up, hopefully.

What opportunities do you see in Azerbaijan in addition to the shopping mall?

Central Asia in general is not an easy market—it's tough. Private equity is something I would like to go into but I think it's not easy. The easier asset class perhaps is real estate. In that regard, we will probably go for other real estate projects. I think this will help us set foot in these countries and get on the learning curve and then perhaps make more deals in private equity.