MAKE A DEAL
TBY talks to Serdar Paksoy, Senior Partner of Paksoy Istanbul, on the major M&A deals happening in Turkey, and the nature of the regulatory environment.
What are the competitive strengths of your firm's legal practice in Turkey?
Paksoy is one of the leading independent law firms in Turkey and enjoys an extensive competitive edge over its rivals through its excellent reputation, strong relationship with clients and regulators, and its vast experience in a broad array of legal issues related to foreign investment transactions. The firm has over 40 fee earners, along with experienced senior partners and members who have the skill and ability to deliver robust, creative, and result-oriented advice to clients. A solid testimony to its transactional capabilities is Paksoy's representation of high-profile investors in big-ticket, cross-border transactions since its inception in 1997. With an excellent track record, extensive resources, tenacity, and organizational skills, Paksoy has proven its ability as a full-service law firm to provide advice in a broad range of sectors and issues, acting as a one-stop shop for its clients as a result of its diversified practice groups from corporate and M&A, employment, energy, infrastructure, finance, regulatory issues, competition, securities, tax, and dispute resolution. Our experienced team of lawyers with in-depth knowledge and hands-on capability in various sectors, including financial services, energy, tax, and securities, are able to provide the best know-how and legal solutions for complex transactions.
What have been some of the flagship transactions your firm has been involved in?
We have acted for many high-profile and complex transactions in a wide spectrum, some of which have been extensively covered in the international media. These include Amgen's acquisition of a controlling stake in Mustafa Nevzat Pharmaceuticals in a competitive tender process worth $700 million; Turkish PE Turkven's acquisition of a 50% stake in Koton, a leading Turkish textile retailer with over 300 outlets; and US Dow Chemical's major joint venture planned in carbon-fiber production with an investment worth $1 billion. In the financial arena we acted for US insurance giant MetLife in its acquisition of a controlling stake in Deniz Emeklilik, a Turkish pension company, in a competitive process worth €162 million; the first direct Eurobond offering from a Turkish bank, Akbank; a 144A and Reg S $500 million 5.75% five-year Eurobond offering from VakıfBank, the first ever senior unsecured bond offering from a deposit-taking state bank; a Reg S sukuk offering from Kuveyt Türk, a participation bank, which marks the first ever sukuk offering from a Turkish entity; ArcelorMittal's sale of shares and a series of warrants in respect of shares in the Turkish steelmaker Erdemir by way of an offering; and Citigroup's sale of a 10% stake in Akbank, off the exchange.
What are the strengths and challenges of Turkey's regulatory environment for foreign investment?
In the last decade, Turkey has adopted an investor-friendly attitude to all foreign and domestic businesses, having ratified several significant regulatory changes, such as the liberalization of markets, while easing red tape, formalities, and procedures in setting up companies as well as improving corporate governance standards. The Turkish government and regulators of various sectors including telecommunications, media, securities, and banking enacted significant regulations to ensure and oversee a reliable, transparent, and efficient market for investors. These were very positive steps taken along the way by Turkish lawmakers and watchdogs, to improve the country's legal, tax, and regulatory framework in a vast array of sectors, thus facilitating an investment environment aligned with EU standards. Therefore, since the early 2000s, we have witnessed an increasing flow of foreign investment in grand capacities in almost every sector, creating a substantial business potential parallel to Turkey's economic growth average of 5%. Turkey's business performance stands out in its region and the world at large, while financial crises continue to constitute a serious threat to world economies including the US and EU member states, which are Turkey's major trading partners.
What regulatory changes are we likely to see over the medium term?
A major overhaul of the Turkish commercial law regime including corporate governance standards, significant audit and reporting requirements, disclosure obligations, liability issues, and efficient board and management structures has recently been promulgated in two main pieces of legislation—the Commercial Code and the Capital Markets Law—that affect both private and listed entities and the securities market in the country. This legislation is expected to further improve the legal and regulatory framework, while adding momentum to an already vibrant climate in the market.
What are the primary legal considerations for taking a company public in Turkey?
Before a joint-stock company decides to go public, it should understand and be aware of the dimensions of the securities law environment designed to protect investors and ensure the effectiveness of the capital markets. Public companies are required to comply with, for example, disclosure requirements and better corporate governance rules, such as the appointment of independent directors. All capital market instruments, including share certificates to be issued or offered to the public, are required to be registered with the capital markets regulator. Unlike other jurisdictions, the only exemption to the registration rule is the issuance of capital market instruments by government entities. Offering rules vary based on the type of securities offered. As a general rule, however, while it is mandatory to prepare offering circular-type disclosure documents for public offerings, it is not mandatory to prepare a disclosure document for private placements or offerings targeting qualified institutional investors. The companies planning to go public should also consider the listing requirements of the Istanbul Stock Exchange (ISE). While some public offering preconditions are eased by the Capital Markets Board, the listing requirements remain the same and should be taken into account before taking any action.
What is your outlook for M&A activity in Turkey?
The first half of 2012 has proven to be very positive with increasing activity in M&A despite the financial and political predicament in eurozone countries, including Turkey's main trading partners, such as Greece, Italy, and Spain. I expect more M&A activity by private equity and strategic investors from all over the globe, and particularly from countries such as China, Korea, and Japan, in the second half of the year, with incrementally more of a focus on energy, infrastructure, financial services, and retail.
© The Business Year - July 2012