We are focusing on mid- and lower-mid-market segments of the economy because Turkey has a very strong private sector constituted of family-owned, mid-sized companies. These companies have experienced significant growth over the last 10 years, and many of them are running into two issues. One is that they have grown their company to reach certain revenue levels, and to grow more they will need to look nationally or internationally. To go to the next level, these businesses need to evolve from entrepreneur-run operations into institutionalized businesses. At that point, they will need a good partner they can rely on. During the expansion phase, institutionalization is the first issue. The second issue is the lack of capital. In Turkey, families invest everything they have into their business, with no long-term financing available. They are not ready to go public at that size, and it is not healthy for them to do so. They need good, long-term capital to be able to achieve their full potential of growth.
Partner, Mediterra Capital
Founder & Managing Director, Kings Road Capital
The 2008 crisis changed my outlook on the world. When the crisis hit, I questioned what was wrong, because I was doing everything the right way according to how I was taught. I went back and studied the people who warned about a potential crisis. What I realized was that they were mostly following the Austrian school of economics, and that was an eye opener. The US-centric education, which I've gone through in Turkey and abroad, is mostly based on the Keynesian school of economics and somewhat on the Chicago school of economics. These schools advocate the government stepping in when things go wrong. I believe that central interventions are actually delaying the problems we are facing and accumulating them, so that when they erupt they may be less frequent, but much larger, like the 2008 crisis. There are different reasons for this. When people act with their own money, if they fail, then another small, competitive company survives and does better.
Mehmet Ali Ersari
Executive Vice President, Ak Asset Management
Ak Asset Management was established in 2000. In the early years, it was all mutual funds, with the dominance of money market funds. In the early 2000s, the short-term interest rates were very high, making fixed income funds, especially money market funds, an attractive investment alternative for retail investors. As the private pension system was established in 2003, we have started managing pension funds as well, and with the solid growth until now, pension funds have become an important portion of our assets under management (AUM); currently, we are the market leader in managing pension funds with a 24% market share. We stepped into discretionary portfolio management in 2007, and have demonstrated huge success in gaining market leadership in less than five years with a 28% market share. In October 2012, Ak Asset Management was the second largest asset manager in Turkey with total AUM of approximately $5.2 billion.
Chairman, Ashmore Asset Management
On the private equity side, it is always dependent on the investment rate of return (IRR) because our job is to provide an attractive return to our investors. Our approach is not sector related. If the IRR is attractive and the prospects are good then we may invest. On the public equities side, we are driven by benchmarks and the outperformance thereof. We manage according to our philosophy on public equity, which is to never invest in companies if we don't know the management or the company. We make regular visits to companies and actively engage via brokers to maintain contact through one-on-one meetings with the management of our investments. Ashmore is dedicated to obtaining and maintaining knowledge of the companies we invest in. On the fixed income side, we work very closely with our global fixed income fund managers in order to understand macro events. Our London-based fund managers are also large ticket investors in Turkey, which helps the local Ashmore business with relationships at the Treasury and the Central Bank.