The currency fluctuations in Turkey have resulted in challenges but have also created opportunities for investment in the country, according to Esin Attorney Partnership Partner Caner Elmas.
"The past few months we have witnessed an interesting phase in the Turkish M&A market, considering the inflation and currency fluctuations," Elmas says. "The major obstacles are related to the valuation of assets for both buyers and investors, due to the ever-changing value of the Turkish Lira." At the same time, Elmas points out that "investors who either have a presence or operations in Turkey have benefited from the current situation, as the situation has created an opportunity to buy Turkish assets and invest in Turkey."
Overall, Elmas considers that the Turkish Lira fluctuation has had a significant impact on the market. "It has become very difficult for financial investors to invest in Turkey, where the target business is primarily focused on the local market. However, when the target business has income in foreign currency, for instance, by selling products abroad, it is a completely different story, as they have significant advantages," he says.
"For strategic investors, this has been a very opportunistic era," Elmas adds. "We have seen an increased number of clients coming to Turkey to either increase their operations capacity or to build a hub for their nearby markets. The pandemic definitely has played a significant role in this process where international trade has been affected due to issues in transportation costs and timing." According to him, "due to the obstacles in the international transportation of products and services from the far East, many businesses are considering ways to substitute their location of production." Eventually, Turkey has become "a place of attraction for those who are either familiar with or believe in the Turkish market and the importance of the country's location," he concludes.
In terms of legislative updates, Elmas says that there has been no major change regarding the investment schemes. "Legal environment in terms of investments remains more or less the same for a number of years," he explains. "Foreign investors are treated equally as domestic investors, which has been important for foreign investment. The legislative framework in that regard remains unchanged."