Turkey’s Dormant Wealth Fund Plans to Borrow $1 Billion

(Bloomberg) -- Turkey’s largely inactive sovereign-wealth fund will borrow $1 billion from international lenders, more than two years after it was founded, three people with knowledge of the plan said.

The fund, formally known as Turkiye Varlik Fonu, will borrow the money early next year, the people said, asking not to be identified because the plan isn’t public. The syndicated loan will have a maturity of two years with an option to extend another year, according to two of the people. The Istanbul-based fund declined to comment.

A person with direct knowledge of the fund’s official mandate said earlier that the fund plans to borrow to inject cash into companies in its portfolio.

After President Recep Tayyip Erdogan was elected as the first executive president of the republic, he overhauled the fund’s management by replacing the entire board and naming himself chairman. The original Chief Executive Officer Mehmet Bostan was forced to leave his post after Erdogan said he was “disappointed” with the fund’s lack of progress.

The fund owns stakes in a number of government enterprises including Turk Hava Yollari AO, or Turkish Airlines; Turkiye Halk Bankasi AS and Turk Telekomunikasyon AS. Turkey’s postal-services company PTT was also taken over by the fund through a presidential decree published in the Official Gazette on Wednesday.

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