KPMG Perspektifinden Birleşme ve Satın Alma Trendleri

KPMG Turkey announces “KPMG Zoom: Mergers and Acquisitions Trends 2022”

As KPMG Turkey, we are pleased to present the fourth "Mergers and Acquisition Trends 2022 from KPMG Perspective" report.

KPMG Zoom: Mergers and Acquisitions Trends – 2022 According to our report, which evaluates data from 2022, merger and acquisition transactions worldwide decreased in terms of transaction volume compared to 2021, but approached last year's record level in terms of number of transactions. In Turkey, the number of transactions declined, as did the transaction volume. The total volume of reported transactions reached $5.3 billion, while the estimated total volume including unreported transactions was $6.5 billion. Optimistic expectations are maintained for 2023, with both the volume and number of transactions expected to increase due to interest in the technology and manufacturing industries.

It is fair to say that the ongoing Russia-Ukraine war, along with high inflation around the world, rising interest rates in many countries and recession fears, will affect investor appetite globally. In addition, falling valuations in the technology industry and consolidation opportunities that may arise in many different sectors are the main drivers of expectations for 2023. In our country, in addition to the above developments, the impact of predictable monetary and exchange rate policies on economic indicators to achieve growth, job creation and price stability targets is expected to influence investor appetite. However, political uncertainty and security issues that may originate from neighboring countries in 2023 are considered further downside risks.

Müşfik Cantekinler
Head of Deal Advisory
KPMG Türkiye

Given the transformation of supply chains and the starting of the consolidation process in many industries in parallel with recession expectations, we maintain our optimistic expectations for 2023 and expect the volume and number of transactions to increase on that basis.

Gökhan Kaçmaz
Retail & Consumer Goods Sector Leader - Partner, M&A Advisory
KPMG Türkiye

The main issues in 2022 were the Russia-Ukraine war, rising commodity and food prices, increasing inflation and fears of recession due to rising interest rates in many countries

In 2021, the Covid-19 pandemic lost its impact on social, economic, and commercial life at global and national levels with the ambitious roll-out of vaccination campaigns. However, the war between Russia and Ukraine that began in February 2022, the rise in commodity and food prices in parallel with the sanctions imposed on Russia, rising inflation as a result of monetary expansion during the pandemic period, and the threat of recession that emerged as central banks raised interest rates in many countries in response, were the main themes of the global economy in 2022 which had a significant impact on investors' appetite for investment.

In 2022, M&A activity globally was similar to previous years, with the exception of 2021, while in Turkey, transaction volume was similar to previous years, with the exception of 2021. On the other hand, the number of transactions was slightly lower than in previous years. In 2022, mergers and acquisitions worth around $3.5 trillion took place worldwide, with no significant changes compared to with previous years. In Turkey, the announced transaction volume was $5.3 billion.

The transaction volume for mergers and acquisitions in Turkey was in line with previous years, with the exception of 2021

Türk Telekom was the only "mega" transaction of 2022

Parallel to global trends, the technology, media and telecom, and manufacturing sectors took the lead in terms of the number of transactions in 2022, on the back of the growing importance of various components of technology and the reshaping of digitalization and transformation of supply chains. In line with these trends, the technology, media and telecommunications (TMT) sector stood out in terms of transaction volume. The largest transaction in the TMT sector in Turkey was the acquisition of 55% of Türk Telekom shares by Turkey Wealth Fund for $1 billion 650 million.

This transaction was also the only "mega transaction" to cross the billion mark in Turkey in 2022. Another important transaction in the technology, media and telecommunications sectors was the acquisition of a 6.8 percent stake in Getir with an investment of $768 million by a financial investor group that included investors such as Mubadala Investment Company, Sequoia Capital and Tiger Global. Another transaction that crossed the half-billion-dollar threshold was the acquisition of a 50 percent stake in Kalyon Güneş Enerjisi Üretim by UAE-based International Holding Company.

$3.6 billion generated in transaction volume by financial investors

Financial investors (private equity, venture capital, sovereign wealth funds, etc.) conducted 150 transactions in 2021 with their share in total transaction volume standing at 21 percent. In 2022, financial investors conducted 82 transactions, and their share of total transaction volume exceeded the previous year's figure to stand at 68 percent.

The acquisition of 9.3 percent of Dream Games shares by a group of investors comprising Index Ventures, Balderton Capital, Makers Fund, BlackRock Private Equity Partners, Kora and Institutional Venture Partners with an investment of $255 million and the acquisition of 9.9 percent of Insider shares by Qatar Investment Authority, 212, Sequoia Capital India, Wamda Capital, Endeavour Catalyst, Riverwood Capital, Esas Private Equity, ESPRO Investment with an investment of $121 million were among the prominent transactions by financial investors.

Transaction volume of foreign investors exceeds domestic investors

Foreign investors made a total of 67 mergers and acquisitions in 2022. The number of mergers and acquisitions by foreign investors in 2022 was the same as in previous years and accounted for 32 percent of the total number of transactions. On the other hand, the transaction volume of foreign investors in 2022 was $3 billion, and their share in the total transaction volume remained higher than that of domestic investors at 58 percent. It is also worth noting that seven of the 10 largest transactions in 2022 were made by foreign investors.

Value-generation by public sector transactions continued this year

In 2021, there was burgeoning investors' activity originating from the State Airport Authority (DHMI) and the Privatization Administration (ÖİB), as well as in transactions from the public sector. In 2022, in addition to the purchase of 55 percent of Türk Telekom shares by the Turkey Wealth Fund for $1 billion 650 million, the transfer of Aynes Gıda by the SDIF to the Turkish Agricultural Credit Cooperatives for $43 million were other public sector transactions that left their mark on 2022.

Expectations for 2023

1

Technology, media and telecommunications, industrial manufacturing and automotive, transportation, pharmaceuticals, and healthcare are expected to be among the leading sectors in terms of mergers and acquisitions in 2023.

The realization of strategic investments targeted by the Turkey Wealth Fund (TWF), the tender procedures of firms transferred to the Savings Deposit Insurance Fund (SDIF), and the launch of tender procedures for the assets in their portfolio by the Privatization Administration (PA) are among the factors that could increase transaction volumes.

2

Although the main determinant of M&A activity is investors' appetite and risk perception, it can be observed that foreign investors' interest in Turkey is increasing, especially for strategic industries. The fact that domestic firms seeking merger and acquisition opportunities are becoming part of the process may also increase transaction volumes.

In 2023, when global and regional uncertainties are anticipated to disappear, the volume and number of transactions in Turkey is expected to increase.