$5.7bn motorways sale caps Turkish deal spree

Koc Holdings, UEM Group and Gozde offered $5.72bn yesterday for a 25-year concession to operate and maintain close to 2,000km of road across Turkey, including Istanbul’s two suspension bridges. The deal is the country’s second-largest privatisation.

After first being mooted in 2008, Turkey’s privatisation of close to 2,000 kilometres of roads – including Istanbul’s two suspension bridges – came to a close yesterday on a high note: a $5.72 billion bid from a Turkish-Malaysian consortium, turning the sale into the country’s second-largest privatisation.
 
Koc Holding (40 percent), Turkey’s biggest industrial and services group, Malaysia’s state-backed engineering concern UEM Group (40 percent), and Turkish-listed private equity firm Gozde Girisim Sermayesi Yatirim Ortakligi (20 percent) have won the 25-year concession to operate and maintain the roads package, in an auction conducted by Turkey’s Privatisation Administration.
 
Two other consortia – a Turkish team led by Nurol Holding and an Atlantia-led consortium – had been invited to submit final bids at yesterday’s auction.
 
The tender process for the roads package has been delayed several times since the assets were first put up for sale in August 2011. The privatisation programme was originally touted in mid-2008, but failed to gain traction due to a decline in available funding, caused by the emergence of the global financial crisis. It now sits behind 2005’s sale of a 55 percent stake in Turk Telekom for $6.55 billion, Turkey’s largest privatisation to date.
 
The roads sell-off caps a strong end-of-year run for the Turkish infrastructure market. Last week, the $1.24 billion Istanbul Strait Road Crossing Project – a road and undersea tunnel linking Istanbul’s European and Asian sides – reached financial close after three-and-a half years in the market. The project was backed by an 18-year, $960 million loan – arranged by financial advisor Unicredit – which had the distinction of being Turkey’s longest project financing. 
 
Earlier this month, Turkish airports operator TAV clinched a $250 million debt package to help build a new domestic terminal at Izmir Airport, located in Turkey’s third-largest city. And in May, Italian developer Astaldi won a build-operate-transfer contract for a $2.5 billion third Istanbul bridge. 
 
Deal flow is set to continue in 2013, with the €940 million Etlik hospital complex, in Ankara, on track to become the first project in Turkey’s multi-billion euro healthcare programme to reach financial close.
 
*To find out more about Turkey’s infrastructure plans, click here to read our latest country report, published in the December/January 2012/2013 issue of Infrastructure Investor magazine.