Strengthening its capital structure after a partnership with Wellcome Trust and planning to expand to Middle Eastern markets, UNLU & Co Chairman Mahmut Ünlü evaluated the investment environment of Turkey for us. Founded in 1996 as an independent financial consultancy firm, UNLU & Co today became one of the largest investment banking and asset management groups in Turkey. We talked to Mahmut Ünlü, the Chairman of UNLU & Co., which provides world-class, innovative stock exchange market and asset management solutions to its customers. Mahmut Ünlü said “I think the second half of 2016 will be more active in terms of mergers and acquisitions. Even though January and February were lost months for Turkey as well as for the whole world, I believe domestic demand and domestic consumption will put us forward this year.” When you evaluate the performance of Turkey over the last 10 years, how do you see its progress in terms of attracting international investments? I think the most important story of a country lies in its growth performance. Turkey’s growth is heavily relied on outside financial sources, because it does not have its own savings and its savings ratio is one of the most lowest among OECD countries. When you look at Turkey’s performance in last 10 years with that perspective, you see four main periods. The first period is between 2005 and 2008 in which two strong factors stood out. Cash abundance in the world coincided with Turkey’s normalization period after years of uncertainties. In other words, it was the best time for Turkey to draw foreign investors’ attention. When I started my professional life in 1996, foreign direct investment inflow of 500 million dollars a year was considered as success. Likewise, the total amount of foreign direct investment was only 23 billion dollars between 1923 and 2004. However between 2004 and 2008, Turkey received 55 billion dollars of direct investment. So it is fair to say that we grew exponentially during that period. The second period started in 2008 when the Lehmann Brothers collapsed and the global financial crisis aroused. Turkey had a rough time drawing the attention of foreign investors until 2010 because of the crisis. However as the crisis hit developed markets, emerging economies started to receive more foreign investments during the period between 2010 and 2013, thanks to their political stability. At the time, Turkey received 35 billion dollars of direct investment. The fourth important period for Turkey came after 2013: Four elections as well as new geopolitical conditions determined the economic agenda. The growth type of Turkey also changed during that time. 60 to 75% of the economy’s growth came from domestic consumption between 2004 and 2013, but in the last two years, it mostly sourced from government expenditure and exports. As a result, foreign capital has a great significance coğfor Turkey’s growth today. In order for Turkey to attract foreign investors’ attention, its future projections have to be positive. I believe Turkey maintains its charm for foreign investors even in today’s conditions and the cash inflow will continue to increase this year as well as the next years to come. UNLU& Co. plans to grow its operations in Turkey while at the same time expanding to the regions of Middle East and Northern Africa over the next couple of years. How will your partnership with Wellcome Trust contribute to this target? Our capital structure in UNLU & Co has gained more strength as a result of our partnership with the world leader Wellcome Trust. This partnership will contribute to our strategy of becoming a regional leader in investment banking and asset management services. We are going to actualize our inorganic growth plan for the next years and we will make new investments with our improved capital structure after this partnership. We plan to expand to the regions of Middle East and Northern Africa while increasing our presence in Turkey. We target to take the first step of this plan in Iran, against which the international sanctions have been lifted. We will provide brokerage services in the Iranian Stock Exchange as well as other fund management services with the aim to benefit from the potential we see in the country. With this investment, we will offer an opportunity for Turkish investors to evaluate assets in the economy of Iran. We aim to be a leader in investment banking in Middle East and Northern Africa regions over the next 10 years. As part of our strategic plan to become an investment banking leader in each market we focus on, over the next period we will keep investing in new financial centers of the world because we know that in order to reach that goal, we have to be present and operate in all the finance centers around the world. In 2016, we will intensify our New York and Singapore operations while continuing on efforts to initiate our Middle East-centric operations. In the last couple of years, Turkey has shown a great potential in terms of mergers and acquisitions. We heard many large holdings and corporations realized enormous acquisitions in Turkey. How do you evaluate the country’s performance in that regard? Turkey is an emerging country that offers many important, high potential investment opportunities, especially in the infrastructure and energy sectors. It is a very dynamic market with a young population rate. Plus its geopolitical location in the middle of trade routes makes it a great intercultural geography. All of these qualifications help to increase its investment potential. The elections in the last two years, other instabilities and US Central Bank’s tight monetary policy affected Turkey’s growth and investment performance from time to time as in other emerging economies. However I can say by the long-term perspective that Turkey will have much more international attention and investment in the next years. How do you think the following days will be, regarding the merger and acquisition environment? How do you foresee 2016 to be? I think the second half of 2016 will be more active in terms of mergers and acquisitions. Even though January and February were lost months for Turkey as well as for the whole world, I believe domestic demand and domestic consumption will put us forward this year. Are there many foreign investors at the moment, who are interested in Turkey? The potential foreign investor profile for Turkey is more based in Europe and the US. However, in the last years we have observed an increasing amount of interest coming from investors in the Far East. As UNLU & Co., we chose to respond to that demand by establishing an office in Singapore. We frequently meet with potential investors from Singapore and Malaysia as part of our Far East and Southeast Asia operations, to tell them about our country’s potential. We also observe a rising interest coming from Gulf countries. They are mostly focused on food, education, health and real estate industries. Which sectors are most interesting for foreign investors in Turkey? Can you tell us about the ones with growth potential? When we consider the consumer profile in Turkey and the country’s economic infrastructure, we can say that retail, food and the consumer goods industries show a tendency for growth and companies operating in those fields are more likely to be acquired. How do foreign investors observe the Turkish economy? Are they affected by the latest developments in the country? Even though terrorist attacks and geopolitical problems might cause a sense of abstention in the short term, foreign direct investors plan their investments in different markets based on their mid and long term projections. Therefore we observe that foreign investors’ faith in Turkey and its potential still continues. Today, one of the basic problems of the global economy is maintaining growth, and we believe Turkey will create a success story out of this period as it had done for many times in the past. And when it tells this story to the outside world much more efficiently, the inflow of foreign capital will accelerate rapidly.