Turkish dairy sector 'very attractive' investment opportunity

EBRD, which is funded by capital investment from countries and organisations around the world, and private equity firm The Abraaj Group announced yesterday that they have entered into an agreement to jointly acquire a majority stake in Turkish dairy manufacturer, Yörsan.

Both EBRD and The Abraaj Group declined to disclose the value of the deal, or the exact details of their newly acquired shareholding.

The deal marks EBRD’s first equity investment in the Turkish dairy industry, which is currently worth around $3.6bn (€2.7bn) and is expected to grow at a rate of 8.6% per annum between 2012 and 2017.

Speaking with DairyReporter.com, Tamara Tosic, associate banker at EBRD, detailed the factors that drove it to invest in Yörsan.

“We find the Turkish dairy sector very attractive,” ​said Tosic.

“There are attractive macro fundamentals such as Turkey’s young population and increasing disposable income. It is also has a very defensive industry,” ​she said.

“Secondly, we have the growth of the organised retail sector which should further support the conversion from open to packaged products. ​And thirdly, there is more demand for healthy products,” ​said Tosic.

Strong brand presence​

Ankara-based Yörsan, which was established in 1964, manufactures and markets a wide range of dairy products including fresh milk, cheese, butter, yogurt and the traditional Turkish yogurt drink ayran.

Since its inception, Yörsan has developed a “strong brand presence” ​that EBRD and The Abraaj Group hope to build on.

“We like the company,”​ said Tosic. “They have a very strong brand and a leading position in the higher value-added dairy segments with products such as cheese, ayran, and yogurt.”​

“They have developed a strong brand presence and we look forward to working with Abraaj and the company in its next phase of growth.”​

EBRD and The Abraaj Group plan to fuel this growth through by expanding the manufacturer’s product portfolio, increasing sales, and improving its distribution networks in Turkey and abroad.

Market leader “potential”​

The Abraaj Group is a leading global growth market investor, and boasts an existing interest in dairy through its minority stake in East Africa’s largest dairy processor, Kenya-based Brookside Dairy, and its recent decision to team up with Danone to acquire West Africa dairy manufacturer Fan Milk International. 

Its investment in Yörsan is its eighth in Turkey since 2007.

“Yörsan is a long established and respected brand in the Turkish dairy sector,”​ said Omed Syed, managing director of The Abraaj Group.

“We believe the company has great potential to quickly become the market leader in the higher value dairy segment. The combination of Abraaj’s unique value creation focus, our global experience in the dairy industry and the strength of the company’s management team will realize our ambition of transforming Yörsan from a highly successful family run Turkish dairy business into a world class FMCG player,”​ said Syed.