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Abraaj takes $100m stake in Turkish online group Hepsiburada

22 February, 2015

Deal is latest in a string of investments in the country by Dubai-based buyout group

Abraaj Capital, the Dubai-based private equity group, has taken a stake of around $100m in Turkey’s largest online retailer amid growing investor interest in the country’s increasingly internet-savvy population.

Abraaj has acquired 25 per cent of Hepsiburada, in a deal that values the group at more than $400m, said people familiar with the matter.

The purchase will place Abraaj alongside Turkey’s Doğan family, who control one of the country’s largest conglomerates, as owners of the ecommerce business. Hepsiburada reported TL1bn ($408m) in sales in 2014, having grown 25-fold over the past decade.

The Dubai-based group’s investment will be used to expand operations and consolidate the warehouse network of Hepsiburada, whose name translates as “it’s all here”.

Hepsiburada’s 14m monthly visitors equates to more than a third of Turkey’s online population, but internet usage and online retailing still have some way to expand in the country compared to other emerging markets.

Turkey has been a tough market to break into for private equity investors, given valuations and the volatility of the lira in recent years.

“Private equity exposure to Turkey versus its GDP is 0.04 per cent”, compared to 0.12 per cent in the Brics emerging markets and 1 per cent in the US or UK, said Selçuk Yorgancıoğlu, a partner and head of Turkey and Central Asia at Abraaj.

Nevertheless, Hepsiburada is the latest in a string of Abraaj investments in Turkey, and the first from a new $500m fund specifically being raised for the country. Abraaj, which has $7.5bn under management, has invested $844m in Turkey since 2007 and has made $827m in profits on exiting four of its investments there.

Hanzade Dogan Boyner, Hepsiburada’s chairwoman, said the group had been looking for a partner for two or three years and that while Turkey remained the company’s top priority, “with their [Abraaj’s] support we will consider regional expansion in the future”.

The company has come a long way since 1999, when Ms Dogan Boyner and her three sisters bought out the group’s predecessor, renaming it and greatly expanding the product range.

But even as Hepsiburada has grown, the Doğan family’s traditional media business has been cut down in size because of tensions with Turkish president Recep Tayyip Erdogan. After the government imposed a record $2.5bn tax fine on the media business in 2009, the group sold many of its assets, including newspapers and television channels.

“I don’t see any political risk,” Ms Dogan Boyner said. “Hepsiburada is a company Turkey should be proud of — in most countries the ecommerce market is dominated by international players; we have managed to get the leadership in a sizeable market.”