By Ebru Tuncay and Alexander Cornwell
ISTANBUL (Reuters) -Abu Dhabi is set to buy a stake in a key Turkish port, according to four sources aware of the deal, in a further sign of a rapprochement between the once bitter geopolitical rivals.
Under the potential agreement, state-controlled group AD Ports Group would invest in an entity to be established by the Turkey Wealth Fund to run the Aegean coast port of Izmir, said two of the sources. The sources requested anonymity to discuss details of the deal that has yet to be finalized.
The size of the stake was not immediately clear but one of the sources said the deal could be valued at about $500 million. The port, owned by Turkey's sovereign wealth fund, is an important gateway that is in need of new investment.An official for the Turkey Wealth Fund declined to comment. AD Ports didn't immediately respond to a request for comment while ADQ, the emirate's sovereign wealth fund and majority owner of the ports group, wasn't available for comment.
The planned transaction comes as Turkey's government seeks foreign investment to accelerate its U-turn away from years of unorthodox economic policies that had sent inflation soaring and the currency plunging.
Ports play a key role in the strategic shift in global manufacturing. Weaknesses in supply chains exposed by the COVID 19 pandemic and heightened geopolitical tensions are spurring a shake-up as companies seek to bring production closer to the point of sales.Meanwhile, Turkey hopes that an aggressive rate-hiking cycle launched in June will draw back foreign investors after years of exodus, including foreign direct investment (FDI). Some Western investors are starting to tip-toe back in to markets.Turkish President Tayyip Erdogan met with UAE President Sheikh Mohamed bin Zayed Al Nahyan on the sidelines of the COP28 U.N. climate summit held in Dubai earlier this month. ADQ is chaired by National Security Adviser Sheikh Tahnoun bin Zayed Al Nahyan, a brother of Sheikh Mohamed.
Turkey and the UAE began to repair ties two years ago following a bitter rivalry that was in a large part driven by ideological difference which saw the regional powers back opposing sides across the Middle East and North Africa.
UAE officials have since said they see huge investment opportunities in Turkey, including in energy and logistics. The Dubai state-owned port operating giant DP World bought a majority stake in a Turkish port earlier this year.
The UAE and Turkey signed a free trade agreement in May that was meant to make investment easier.
The two countries agreed a series of deals worth more than $50 billion in July as the Turkish president visited Gulf states in a bid to revive the economy.