Investcorp buys stake in Turkey’s Tiryaki Agro

Alternative investments firm Investcorp will make a $50 million investment in Turkey’s Tiryaki Agro, trader and supply chain manager of agro commodities, the company has announced.

In a media statement, Investcorp said that the investment made via its Gulf Opportunity Fund I in Tiryaki Agro makes it “a significant minority shareholder” in the latter.
The capital will be mostly used to invest in new assets to strengthen Tiryaki Agro’s growth and support its expansion into different markets in the region, the statement added.

“This is our first investment in Turkey, a country in which we see many future opportunities for growth for Investcorp,” Mohammed Al Shroogi, Investcorp’s President, Gulf Business, said.

“We had different alternatives to consider for the next phase of our growth. We chose to work with Investcorp as we believe it brings unique understanding and strong capabilities that will help accelerate Tiryaki Agro’s growth,” said Ahmet Tiryakioğlu, Tiryaki Agro’s Chairman.

The agro industry is an extremely resilient industry with growth driven by population and income growth as well as by changes in dietary preferences. The fragmented structure of the trading and supply chain management sector creates strong opportunities for integrated companies such as Tiryaki Agro that have distinct competitive advantages in sourcing, logistics and processing.

This transaction is the fourth investment by Investcorp's Gulf Opportunity Fund I, the $1 billion private equity fund of Investcorp for the MENA region and Turkey. What makes this deal especially interesting is the timing. Rising prices for a wide range of agricultural commodities are stirring fears of global food-driven inflation.

A number of countries are taking proactive measures to counter such inflation. Egypt, the world’s biggest wheat importer, quickly refilled its order book after drought-hit Russia banned exports in a bid to avoid shortages and a rerun of violent protests seen in 2008.

Wheat futures in Chicago raced to a two-year high of $8.41 a bushel in early August after Russia, suffering its worst drought in more than a century, banned wheat and flour exports.

Surging agricultural commodity prices in 2007-08 led to a sharp rise in the cost of basic food staples, sparking riots in several countries. In some cases, governments responded by banning exports in a bid to stem food price inflation. It took a global economic downturn to end the crisis.

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