Turkish Firm Ak-Kim Scouting for European Deals Before IPO

(Bloomberg) -- Turkish chemicals maker Ak-Kim Kimya is working with Raiffeisen Investment AG to scout for European acquisitions ahead of a planned initial public offering.

Ak-Kim Kimya Sanayi ve Ticaret AS, as the company is formally known, is eyeing targets with sales of between 400 million euros ($446 million) and 450 million euros, Chief Executive Officer Onur Kipri said in an interview on Monday. The search work by the Vienna-based investment bank has just started and may not result in deals, he said.

The Istanbul-based company is looking abroad to spread risk as Turkey’s growth prospects dim following last year’s plunge in the lira to record lows. Other investors got an early march on their expansion plans, with Yildiz Holding AS, Turkey’s biggest food maker, acquiring Godiva chocolates and the maker of McVitie’s biscuits before the currency’s crash, while Yildirim Holding AS is continuing to add assets to its investments in ports.

“We’re both seeking to diversify by going into new businesses and also to expand our existing production lines,” said Kipri. “We would prefer a company that’s been globalized and which we could eventually merge with Ak-Kim,” he said, adding that a potential target should also have “a specific product line with a high export potential.”

Pending IPO

Ak-Kim’s parent Akkok Holding AS plans to sell shares in an IPO in three or four years, possibly in London, after the merged company’s annual sales reach $600 million to $700 million, compared with $300 million in 2018, Kipri said. Ak-Kim, which hedges itself against fluctuations in the Turkish lira by selling in the currency of its production costs, is planning to use loans to fund acquisitions, he said.

Ak-Kim makes chemicals for several industries including construction, pharmaceuticals, plastics, home-care products, steel and water purification at plants in Turkey that have a total annual capacity of 800,000 tons. The firm has bought Germany’s chemicals company Dinox and Gizem Frit, a ceramics coating company in Turkey, as part of its expansion plans.

The company is increasing the capacity of its hydrogen-peroxide plant in Yalova, near Istanbul, to 86,000 tons from late 2020, compared with 36,000 tons currently, Kipri said. The upgrade will require a 40 million euros investment.

(A previous version of this story corrected the last name of the CEO and company throughout, while the company corrected the capacity increase of its Yalova plant.)

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