EQUITY CONNECTION

Turkey 2012 | ECONOMY | INTERVIEW

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

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, 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 2012 with 3,500 cars, but when we bought it in 2008, it had only 150 cars.

We acquired it with very a small investment of 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 other fields?

We have established an insurance company called Neova. This has been 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 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 Kuveyt Türk's branches as our sales points, but we're also accessing the other participation banks and their branches.

We have signed with alBaraka, which means 150 branches, and Türkiye Finans (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 nation wide. It is this network that has yielded such incredible results.

In which other countries in the region 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; 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, but we haven't committed or decided what to do yet. However, there are some good opportunities coming up, hopefully.

How does Turkapital work with Turkey's dynamic economy?

As far as the Turkish lira and the other economical ups and downs are concerned, this is part of the market dynamic, and we do what it takes to adapt whether it's hedging or whatever else it takes. We are part of the market, and we are living with the market—we try and take good advantage of any opportunities we see, but at this point we see everything as an opportunity.

In 2001 when the major crisis hit Turkey, Kuveyt Türk came out winning and gaining as there was a run on the banks and people wanted their money and deposits. The banks were so scared and concerned that they were losing their funds. In our case, we paid every single penny to every depositor. Even those whose deposits were not mature wanted their money before time, and we gave it to them. It gave our clients confidence and it showed them our strength. We try to take advantage of all the opportunities and also to be prepared for any crisis or hiccup in the market.

Are you still looking for new projects within Turkey?

In general terms, our interest in private equity and real estate will continue. We also see more sectors opening up to private equity.

Istanbul is almost like a country on its own. There is always demand for improved living standards, housing standards, and so on. Smaller housing units for families are in demand near shopping centers, and we will also be looking into opportunities there.