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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 24673 |
| Project name | Arkas |
| Country | Turkey |
| Sector | Transportation and Warehousing |
| Department | Infrastructure |
| Company name | Arkas Group |
| Environmental category | B |
| Date SPI disclosed | January 27, 2006 |
| Projected board date | March 2, 2006 |
| Date revised SPI disclosed | May 16, 2007 |
| Status | Active |
| Previous Events | Invested: November 1, 2007
Signed: September 25, 2007
Approved: July 16, 2007 |
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| Description of company and purpose of project |
The Arkas Group (Arkas or the Group) is a diversified transportation conglomerate and Turkey’s leading company in the field of container transportation. The Group’s subsidiaries are primarily involved in agency services, port operations, and sea, road, and rail transportation. They also provide complementary services such as freight forwarding, machinery and vehicle maintenance, and warehousing.
Arkas’s technical capabilities, integrated logistics chain, and strong, long-term relationships with international shipping companies have allowed it to develop a strong market position, offering an excellent platform for continued successful growth. IFC’s corporate loan would provide Arkas with the financial flexibility to proceed with some or all of a number of transportation sector development opportunities in different regions of the country, which will allow the Group to meet the region’s expected growth in container traffic.
Investments currently being considered by Arkas, inter alia, include:
- enhancements to the Group’s port operations, including the greenfield development of Autoport (formerly known as Zeyport), a car export terminal located on the Sea of Marmara;
- the potential acquisition of a concession to develop Iskenderun port (located near the Syrian border), once its privatization proceeds;
- the acquisition of additional port equipment to support Arkas’ current port operations; and
- the acquisition of logistics equipment such as railway wagons to feed its port operations. |
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| Project sponsor and major shareholders of project company |
| The Borrower will be Arkas Holding, which is wholly owned by Mr. Lucien Arkas, Chairman of the Group, and his three children. Arkas Holding is an umbrella entity overseeing the 38 privately held companies operating within the Arkas Group, most of which are based in Turkey. The Group has been active in Turkey since 1902, when Lucien Arkas’s grandfather founded an import/export business in Izmir, Turkey. |
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| Total project cost and proposed IFC investment |
| Arkas would use the IFC financing to fund part of its expected 2007-2008 capital expenditure program of approximately $365 million. The proposed investment consists of an A Loan (for the account of IFC) of $45 million. |
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| Location of project and description of site |
| Arkas is headquartered in Izmir, Turkey, where the majority of its agency and shipping services is undertaken. The Group’s existing port, Marport, is located at the Ambarli complex, on the European shore just to the west of Istanbul. Autoport is located in the city of Golcuk, on the eastern end of the Sea of Marmara in the Gulf of Izmit, close to Turkey’s car manufacturing plants. Furthermore, Arkas has rail and truck depots located throughout the country. |
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| Project Development Impact and IFC's Role |
Arkas’s success stems from its pioneering role in introducing containerization to Turkey, from its well managed port concessions and shipping operations, and from its excellent relationships and partnerships with big international shipping companies. As an innovative leader in its sector that has already made a major contribution to improving Turkey’s transportation and logistics, the Group fully merits IFC’s support.
Specifically, IFC’s loan will provide Arkas with the financial flexibility it needs to seize the various opportunities for expansion and efficiency improvements that are currently available to it. As a profitable, professionally managed group, Arkas is fully capable of taking advantage of these opportunities in order to help develop Turkey’s transportation sector on an efficient, sustainable basis. Turkey’s inadequate port sector is seen as a major bottleneck to economic growth. IFC’s loan will help support the development of an adequately sized, competitive and well run port sector in Turkey which in turn will:
- increase the overall competitiveness of Turkey’s transportation sector, thus reducing costs for consumers and producers;
- help provide exporters with better access to foreign markets, and importers with more timely delivery of production import; and
- facilitate increased trade with other developing countries in the region such as the CIS countries on the Black Sea and countries in North Africa, as well as with the EU.
The project will help Turkey realize its projected substantial increase in port traffic volumes, and the benefits will be shared amongst the Government (through receipt of higher royalties and taxes), project sponsors, inland road and rail transport companies, shipping companies, cargo owners, and final consumers. In addition, increased volumes will result in increased jobs at the terminals, road and rail companies. Since the IFC project involves a corporate loan to the Arkas Group which may be used to finance numerous possible project options, the calculation of a project ERR is not feasible.
IFC’s roles will include:
- the provision of long term financial support to Arkas for the development of the transport sector in Turkey;
- supporting the growth of a domestic company; and
- supporting Arkas in the implementation and application of best practice environmental and social management policies for its new and existing projects. |
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| Environmental and social issues - Category B |
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects, because a limited number of specific environmental impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental social information submitted by Arkas and field visits by IFC staff to selected port services operations, including the Marport terminal at the Ambarli port. Environmental, health and safety (EHS) issues associated with this prospective investment include:
- Environmental, health and safety management systems, including environmental assessment and licensing;
- Port and terminal pollution prevention and abatement;
- Port and terminal emergency preparedness and response, including handling and storage of dangerous cargoes;
- Vessel safety and pollution control; and
- Employee health and safety.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
Environmental documents in the local effected community will be available at the administrative offices of Arkas Holding S.A.:
Liman Caddesi Arkas Binasi No. 38
Alsancak 35230
Izmir, Turkey
Kasap Sokak Arkas Binasi No: 2/9
Esentepe 34394
Istanbul, Turkey |
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| To contact the project company, please write to: |
Horace Dumitrescu
Arkas Holding S.A.
Liman Caddesi Arkas Binasi No. 38
Alsancak 35230
Izmir, Turkey |
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