Owner of Top Turkish Fund Eyes 40% Asset Growth After Merger

(Bloomberg) -- The owner of Turkey’s best-performing equity fund expects its merger with a larger rival will give the combined firm scope to boost assets under management a further 40% by the end of 2020.

The tie-up between Istanbul Portfoy Yonetimi AS and Actus Portfoy Yonetimi AS will give the nation’s second- and third-largest money managers total assets of almost 4 billion liras ($693 million). That compares with the local unit of Azimut Holding SpA, which has 7 billion liras under management.

The aim is to grow the combined company’s assets to $1 billion, Baris Hocaoglu, the chief executive of Istanbul-based Actus, said in an interview. The deal, announced in May, should be completed by the end of this year, he said.

Actus and Istanbul Portfoy are seeking to create the nation’s largest money manager not owned by a bank. By increasing their scale, the companies hope to draw more investors at a time when funds around the world are struggling to compete with passive investments such as exchange traded funds.

Istanbul Portfoy, which manages the Turkish equity portfolio of Norway’s sovereign wealth fund, will control 65% of the combined entity. Actus owns the balance and has the option to increase this stake to 75%, with the help of an international investor, Hocaoglu said.

“We are in talks with an international investor,” he said, declining to identify the company. “If we agree, it may have 24% stake in the final entity and Actus 51%.”

Top Fund

The firm is also in talks with international financial institutions and development financiers to seek backing for a $150 million fund that will invest in distressed assets, Hocaoglu said.

The size of each investment, which would include loans under close watch or equity in companies that have working capital troubles, could be about $20 million, he said. Actus, which has about 10 funds, will act as a service provider to the new fund’s partners.

The firm’s equity fund, Actus Portfoy Hisse Senedi Fonu, has returned 63% so far this year, outperforming all other similar funds in the country, according to data compiled by Tefas, a fund-monitoring system. That compares with a gain of 15% for the benchmark Borsa Istanbul 100 Index. The outperformance also attracted inflows from retail investors to Actus’s fund via Tefas for the first time since September.

Actus and Centricus Asset Management Ltd., a buyout firm founded by former Deutsche Bank AG bankers Michele Faissola and Nizar Al-Bassam as well as ex-Goldman Sachs Group Inc. banker Dalinc Ariburnu, dropped a plan to raise a $1 billion fund to invest in infrastructure projects, he said. The projects lost their allure, Hocaoglu said.

Centricus bought 30% of Actus’s parent, Global Yatirim Holding AS, in 2017.

To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net;Tugce Ozsoy in Istanbul at tozsoy1@bloomberg.net

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, ;Onur Ant at oant@bloomberg.net, Vernon Wessels, Hilton Shone

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