Turkey in recent times has experienced serious growth and this is reflected in how quickly it came out of the global crisis. Of course, the economy was affected to some degree by the credit crunch, but now partners in the country are saying that the main problems are over with and Turkey is beginning to thrive once more....
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Turkey in recent times has experienced serious growth and this is reflected in how quickly it came out of the global crisis. Of course, the economy was affected to some degree by the credit crunch, but now partners in the country are saying that the main problems are over with and Turkey is beginning to thrive once more.
"2011 has been steady, but in 2012 we expect an extremely strong year," comments one partner. Lawyers broadly agree that the impact of the financial crisis "has almost gone." With just some residues remaining: "Banks are still very picky," says a finance partner.
The big news is the new commercial codes that will come into power officially on July 1 2012. This is a sea change in the legislative landscape in Turkey and opinion is almost unanimously in favour.
"These changes are very, very important. We have needed these renovations for a long time... [it] enables investors to get in to Turkey without the hassle of securing a lot of shareholders, for instance," remarks one partner, while another adds that the "new codes will bring a high new level of sophistication to the Turkish economy and the law [and] in almost all aspects it will be facilitating foreign investment."
Elsewhere, firms are beginning to see a broader pool of foreign investors, a key aspect of the market. "We have diversification, with investors from China, South Korea, the Gulf, CIS (Commonwealth of Independent States) and Russia all involved," says a lawyer.
Key attractions to investors are infrastructure and the government's privatisation programme which, say lawyers, "is a real hotspot and very much on the government's agenda". "The privatisation of motorways and bridges will be a massive investment, and will probably come in after the elections [June 2011]."
Despite banking lagging a little behind, both corporate and capital markets have performed well over the last year. "We have had a few mandates for public offerings and there will be more this year. The market is really picking up," says one partner while another adds that "the new codes will make a definitive impact here... IPO's will be much easier, and there will be new structures for IPOs, buyouts and acquisition finance."
Project finance is also a fertile area for growth. According to one firm, project finance "was very active in the past... and is now coming back. Privatisations and infrastructure are going to be big and will really get going after the elections. Energy never loses interest. Renewables are very hot, and wind is popular."
"New nuclear power plants will be a massive project finance issue," adds another, although "there are a lot of considerations with one of the sites too close to an earthquake zone and with the events in Japan people are not all happy with it"
A final trend reflects the country's strategic geographical location. Partners say that recent unrest in the Middle East has meant "companies are wanting to locate their production and distribution in Turkey".
"[It] is the most secure jurisdiction in the area," says a lawyer, "a lot of Egyptian companies especially want to be in Turkey. Telecoms and construction are definitely looking to relocate, mainly from Libya and Egypt".
In the other direction, Turkish companies are now reaching out to invest in the region. "I have actually seen a lot of outside investing. Construction companies have been going offshore for a while but there are Turkish entities buying companies in Romania, Bulgaria and even Germany. I'd say if it was 10% before it is about 30% now. They are looking to establish a global brand by using distressed European companies," explains a corporate practitioner.
Overall it is a changeable and exciting time for the Turkish legal market, with international firms becoming more and more active.
"The legal sector in Turkey has been growing and has seen a lot of change. There have been a lot of spin-offs and international firms are getting seriously involved. Competition has been amplified over the past few years and fees have really dropped," says one domestic partner, while another is more bullish: "I'm not worried at all about the international firms, as there are a lot of deals going on and there will be enough work for everyone."
The trend to look out for is that these smaller, spin-off firms might be looking to merge their operations further down the line: "It is a small market so mergers might be possible. All the lawyers know each other, are friends, worked together, but successful mergers in Turkey are difficult as no one wants to give up their own stakes," says another domestic partner, while a colleague is more certain: "I think in the coming years there will be a lot of mergers of these small firms to make bigger ones."
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