Is Private Equity (IS:ISGSY) makes direct private equity investments in mid-sized Turkish companies with the aim of providing capital gains and attractive dividends. 2016 was a year of considerable uncertainty in Turkey, creating challenging market conditions for ISGSY’s investee companies and for the wider Turkish economy. Despite this, valuations have remained resilient, with a like-for-like fall of 2.5% versus a reduction of c 4% in 2015, which was arguably a less turbulent year. Including a further TRY10m investment in one of its leisure businesses, PE investments comprised 54% of total assets at 31 December 2016, up from 51% at the end of FY15. The discount to NAV remains over 50%, but further political stabilisation following a referendum in April 2017 could cause this to narrow.
NAV remains flat despite headwinds
NAV of TRY256.2m at 31 December 2016 was up TYR1.1m (0.4%) on the previous year-end. Fair value losses of TRY3.5m on the private equity investments were less than the TRY4.7m seen in FY15, while finance income rose slightly (TRY14.8 vs TRY14.5), helping to offset cost increases of 6.3% to TRY10.3m (FY15: TRY9.7m). Last year witnessed several major terrorist attacks, an intensification of the wars in Iraq and Syria to the south and an attempted coup in Turkey, followed by a period (which is ongoing) of government consolidation of control. In the face of these developments, the steady performance of ISGSY’s NAV was a positive outcome.
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