5.2 billion dollars of the 8 billion dollar transaction volume came from foreigners

In 2023, a total merger and acquisition transaction volume of approximately 8 billion dollars was realized in the Turkish market across 403 transactions. These data point to a 30 percent decrease in transaction volume and a 3 percent decrease in the number of transactions, respectively. Conversely, Turkish companies raised approximately 3.3 billion dollars in funds through initial public offerings (IPOs) in 2023.

According to the 2023 Mergers and Acquisitions Report released by Deloitte Turkey, there was a decline in both merger and acquisition transaction volume and the number of transactions under challenging conditions such as rising borrowing costs, high inflation, and geopolitical tensions. The global mergers and acquisitions market, which reached approximately 4.7 trillion dollars in 2021 following the pandemic, continued to contract for the second consecutive year in 2023. Transaction volume fell to 2.3 trillion dollars, a significant annual decrease of around 25 percent, dropping below the 5-year average of 3.2 trillion dollars. Simultaneously, the number of transactions fell to its lowest level in the last 10 years. Factors such as tightening economic policies, ongoing geopolitical tensions, and the threat of rising inflation stood out as the primary reasons for the slowdown.
In Turkey, the mergers and acquisitions market, which had gained steady momentum over the last 3 years, fell from 11.5 billion dollars in 2022 to 8 billion dollars. Despite a 30 percent shrinkage in total transaction volume, foreign investors maintained a level of interest similar to previous years with 96 transactions and a volume of 5.2 billion US dollars. In 2023, which lacked billion-dollar transactions contrary to the historical trend, the number of large transactions decreased. Among the largest transactions of the year with disclosed values were Getir (500 million dollars), Tofaş - Stellantis (445 million dollars), and Tatneft - Aytemiz (336 million dollars), most of which were carried out by foreign investors.

Foreign interest kept the market afloat

According to the report, the interest of foreign investors and the activity in the mid-market segment kept the mergers and acquisitions market afloat during a difficult year. While the contribution of foreign investors to the total transaction volume reached a high level of 65 percent, the transaction volume reached 5.2 billion dollars. The transaction volume of Turkish investors decreased by approximately 50 percent compared to the previous year. Financial investors, acting quite cautiously in acquisition processes, carried out 22 successful exit transactions.

Deloitte Turkey Mergers and Acquisitions Services Leader Özlem Ulaş stated, “There was a contraction in both global and local merger and acquisition transactions this year. Primarily, factors such as the general elections held in Turkey in 2023, the devastating earthquake disaster, and geopolitical risks led to a slowdown in investment activities and a stagnant year for transactions. Despite these challenging conditions, foreign strategic investors did not lose their interest in Turkey. Investors from Europe, the USA, and the Gulf Region confirmed that the Turkish market offers significant opportunities through the mid-market strategic acquisitions they made. Although high inflation, fluctuations in exchange rates, the slowdown in demand, and geopolitical uncertainties are suppressing investor appetite, we find the steady interest of foreign investors to be positive. The Turkish market can recover very quickly after difficult times. Local elections will take place in the first half of next year, and the implemented economic policies are also expected to start bearing fruit. Furthermore, with the stabilization of the global economy and the easing of financial markets, we can have a more positive expectation for 2024 compared to this year.”

Transactions show new trends

Deloitte Turkey Mergers and Acquisitions Services Director Duygu Doğançay said, “In the Turkish market, strategic investor trends in recent years have been shaped around industrial companies such as packaging, chemicals, and automotive, which are export-oriented based on currency risk. The industrial sector, which is at the center of strategic investments, holds an important position on investors' radar. Turkey's strategic location, competitive workforce, and developed industrial infrastructure form the foundation of merger and acquisition transactions by offering opportunities to investors. Looking at sectoral investment trends, we see that a dynamic ecosystem has begun to form around renewable energy in the energy sector, with transactions focused on themes such as micro-mobility, storage, energy transformation, and sustainability. Internet and mobile services, gaming, e-commerce, and technology continue to stand out as the most attractive sectors for venture capital and angel investors. In addition, new themes emerging in the fields of artificial intelligence and payment systems have also increased investor interest in these areas.”

Foreign investors evaluated opportunities

In 2023, mid-market acquisitions carried out by foreign investors with a strategic perspective came to the fore. Despite the stagnation in the Turkish mergers and acquisitions market, foreign investors maintained their interest in Turkish companies and accounted for 65 percent of the total annual transaction volume. The transaction volume realized by foreign investors reached 5.2 billion dollars in 2023, exceeding the five-year average of 5 billion dollars. The largest foreign investor transaction was the venture capital investment made in Getir (500 million dollars). 7 of the top 10 transactions were carried out by foreign investors from different geographies.
A significant portion (4.4 billion dollars) of the 5.2 billion dollar total foreign investor transaction volume stemmed from strategic investments. This situation highlighted the attractiveness of the Turkish market in the eyes of foreign strategic investors. In contrast, the total value of transactions carried out by Turkish investors fell by a significant 52 percent to 2.8 billion dollars. Despite the drop in value, the total number of transactions by Turkish investors remained almost the same.

Europe holds the largest share among foreign investors

Investments by European investors in Turkey reached the 2.5 billion dollar level. Investors from the European Region accounted for 55 percent of foreign transactions. The share of European investors within foreign investor transactions increased to 48 percent (41 percent in 2022). Similar to previous years, European investors, who carried out 53 transactions, were followed by North American investors with 15 transactions. Gulf investments totaled 1.5 billion dollars across 14 transactions. Notable transactions included Vitol-BP Turkey Petrolleri, DHL Group-MNG Kargo, and TotalEnergies-Rönesans Enerji.

Private equity funds focused on exit transactions

In 2023, financial investors signed 237 transactions totaling approximately 1.3 billion dollars. There was a 6 percent annual decrease in the number of transactions. Among financial investors, venture capital and angel investors once again held the largest share, accounting for approximately 94 percent of the total number of transactions with 222 deals.

The number of transactions carried out by private equity funds fell from 14 in 2022 to 12 in 2023; the transaction value also fell to approximately 291 million dollars in 2023 (383 million dollars in 2022). The sectors focused on by private equity funds were manufacturing, chemicals, and technology. In 2023, the 22 exit transactions carried out by private equity funds and other financial investors were decisive. Actera's exit from Korsini Ambalaj, Mediterra's exit from Lucky Fish, and the strategic sales of Turkven's MNG Kargo and Mikrogrup pointed to both successful exit transactions by private equity funds and foreign strategic investor transactions.

Venture capital focuses on technology, gaming, mobile, and internet sectors

Venture capital and angel investors recorded investments totaling approximately 844 million dollars in 222 transactions. This points to a decrease of approximately 47 percent in transaction value and approximately 3 percent in the number of transactions. The largest transaction of 2023 was the approximately 500 million dollar investment received by Getir, followed by the 121 million dollar investment received by Insider. Looking at the sectoral distribution, 54 percent of venture capital and angel investor transactions focused on technology, gaming, internet, and mobile services. Although the transaction value in the gaming sector fell from 643 million dollars in 2022 to approximately 133 million dollars in 2023, the gaming sector maintained its momentum with 30 transactions.

Large-scale transactions decreased

In 2023, when large-scale transactions decreased, the average transaction size remained below the 2022 average, at 20 million dollars. According to the disclosed values, the share of the top ten transactions was approximately 30 percent (48 percent in 2022). The majority of transactions took place in the mid-market and small early-stage investment segment. 306 transactions with a value of less than 10 million dollars accounted for 76 percent of the total number of transactions. However, these transactions represented only 6 percent of the total transaction volume.

Energy, industry, and technology were again at the forefront

In 2023, the technology sector stood out in terms of the number of transactions in sectors that attracted investor interest, similar to previous years. The technology sector, which led with 85 transactions, was followed by internet and mobile services (38), financial services (38), energy (31), gaming (30), manufacturing (28), and healthcare (26). The energy sector ranked first with 31 transactions and 570 million dollars (disclosed value) in transaction volume. Beyond the two largest energy transactions (bp and Aytemiz) in the fossil fuel-based oil and gas distribution field, more and more investors turned to mergers and acquisitions under the theme of energy transformation. The TotalEnergies-Rönesans Enerji transaction was a significant investment focused on renewable energy.

IPOs stood out

In the Turkish market, there was an increase in IPOs due to decreasing financing opportunities, the small investor's search for profitable investments, and the influence of a wider investor network and developing investment platforms. Due to difficulties in accessing financing and high borrowing costs, companies turned to the capital market to provide resources for growth. Furthermore, in a high-inflation environment, individual investors preferred Borsa Istanbul to protect their savings. The share of individual investors in Borsa Istanbul has doubled since the beginning of 2019. According to data disclosed to the market, as of December 2023, 54 companies successfully went public, and a total of over 3.3 billion dollars in resources was obtained.