Metric Capital Seeking Turkish Investments After Drugmaker Deal

(Bloomberg) --

Metric Capital Partners LLP is looking for more deals in Turkey after investing more in the country’s manufacturing industry than any other international private-equity company over the past two years.

The firm is taking aim at Turkey’s young population relative to Europe as a well as its market of 80 million consumers, John Sinik, a co-founder of London-based Metric Capital, said in an interview. The company is seeking investments after raising 1.2 billion euros ($1.35 billion) for its fourth fund toward the end of last year.

“We’re a special situations fund, which means we’re focused on growth capital, shareholder consolidation and acquisition capital,” the former UBS Group AG banker said. “We’re targeting good companies with good business models, but assets that may have capital needs, deleveraging needs.”

Metric Capital is stepping into a void left by the collapse of Dubai’s Abraaj Group Ltd., one of the world’s biggest emerging-market private equity investors. Its demise in 2018 left the market open to mainly domestic buyout companies with many international investors spooked by President Recep Tayyip Erdogan’s unconventional economic policies, international relations and volatility in the local currency.

The firm earlier this year completed the purchase of a 30% stake in Sanovel Ilac Sanayi AS, Turkey’s third-largest generic drug producer, with a group of investors including Istanbul-based Afendis Capital for $200 million.

Sanovel will start exporting drugs to the U.S. this month after getting approval from the Food and Drug Administration, Sinik said. The company aims to get at least 30% of its total sales through exports in the next two to three years.

Capital Boost

The capital injection from the stake sale helped Sanovel pay off loans and settle back taxes, Sinik said.

“We have de-leveraged the company and it is ready to take off.”

The drugmaker is about to conclude an agreement with an international firm to develop new products at its premises near Istanbul, with a profit-sharing arrangement, he said. It’s also working with a U.S. company to sell drugs in former Soviet Union countries in Asia, and with a Middle Eastern business to sell products there and in North Africa.

In 2018, Metric Capital joined another group of investors that bought 17% of D-ream International, an entertainment management company that owns restaurant chains including Salt Bae’s Nusr-et steakhouse. Its investment in Sanovel and D-ream were made from Metric Capital’s third fund, according to data compiled by Bloomberg.

Asked about exit plans from the two investments, Sinik said: “D-ream is difficult to comment on. We view it as a longer-term investment because of the Covid-19 situation.”

It will review its Sanovel stake in three years. “With its new exports and other work it will be an attractive investment for investors, for large pharma,” he said.

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