Traditional PE funds:
Require investors to make a blind contractual commitment upfront
Set investment criteria that severely limit flexibility
Invest in multiple companies without giving investors any control over investment decisions
Primarily focus on minimizing downside risk across the entire portfolio rather than maximizing returns of each deal
Such PE funds typically have five years to deploy capital and another five years to complete its exit processes. This rigid structure is not compatible with Turkey where the economy goes through difficult times and macroeconomic environment can be highly volatile. This mismatch results in forced exits at bad valuations in down cycles. In fact, none of the DFI-backed PE Funds in Turkey had achieved satisfactory IRRs in the last 20 years.
Our deal-by-deal investment strategy is simple and flexible, with a strong focus on alignment with our trusted co-investors.
We focus on a single investment opportunity at a time. Once we identify a high-potential investment opportunity, we invest our own resources and time to evaluate the opportunity in detail. Then, we negotiate and structure the terms of the investment. Only after this groundwork is completed do we present the opportunity to our co-investors, offering a fully-formed and carefully evaluated deal.
We are not constrained by a particular investment strategy or investment restrictions. Depending on macroeconomic factors, our knowledge of particular sectors, we carefully structure our investments given the market dynamics. Our co-investors also have complete visibility on the investment and can choose whether or not to invest given their risk appetite and strategic interests.
We invest a significant amount in each deal we bring to the table, so we have a lot of skin in the game. Also, we are not compensated by management fees. We only cover our costs once a deal is finalized. We make money when our co-investors make money, once we make a successful exit.
We strongly believe the deal-by-deal private equity model is better aligned with Turkey’s dynamics. It provides investors with much more flexibility: allowing them to choose specific investment opportunities that align with their particular investment goals and appetite for risk. In the deal-by-deal model, there is also no “deployment clock”. Without any countdown, we patiently wait for the right time to invest and divest as well as take extra time researching a target company.