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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 | 23285 |
| Project name | Intercity |
| Country | Turkey |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Ekim Turizm Ticaret ve Sanayi A.S. |
| Environmental category | B |
| Date SPI disclosed | October 4, 2004 |
| Projected board date | December 20, 2004 |
| Date revised SPI disclosed | December 7, 2004 |
| Status | Active |
| Previous Events | Invested: March 16, 2005
Signed: February 17, 2005
Approved: February 10, 2005 |
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| Description of company and purpose of project |
Intercity is the largest automobile fleet operational leasing company in Turkey with over 4000 cars and a 14% share of the fleet rental market in the country. Established in 1992 by Mr. Vural Ak, the company’s CEO, Intercity was one of the earliest entrants into the Turkish leasing sector. Intercity’s primary product is medium term vehicle leasing/financing for enterprises operating in Turkey. The company primarily leases cars, light vans, and trucks which are used for various commercial activities including: supporting sales staff, monitoring and managing inventory and transportation and delivery of goods. At the end of FY’03, the company reported total assets of over $84 million and total tangible equity of $14 million.
The proposed project consists of a combined IFC investment of:
- a term loan for IFC’s account of up to $15 million,
- a term loan for the account of participating banks of up to $25 million, and
- an equity investment amounting to up to 10% share of the company’s shareholding. |
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| Project sponsor and major shareholders of project company |
| Intercity was established in 1992 by its CEO, Mr. Vural Ak. The company is presently majority owned by its Founder. A group of financial investors acquired a significant minority stake in the company in 2004. The consortium of financial investors is led by a Turkish Private Equity Fund managed by Turkven Private Equity (IFC is a cornerstone investor in this fund) and Advent International Corporation, and includes DEG (the German bilateral development agency) and FMO (the Dutch bilateral development agency). DEG and FMO have also simultaneously provided a $20 million long term financing facility to Intercity. |
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| Total project cost and proposed IFC investment |
IFC’s proposed investment consists of:
- a six year $15 million term loan for IFC’s own account.
- a five-six year $25 million B Loan for the accounts of participating banks.
- an equity investment of up to 10% of the company’s shareholding. |
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| Location of project and description of site |
| Intercity operates out of its head office in Istanbul, Turkey. The company also has offices and service centers in Ankara and Izmir. The company is planning to open several other service centers in 2005. Under the proposed project, the company can provide lease financing to companies throughout the country. |
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| Project Development Impact and IFC's Role |
The main objective of this project is to address the scarcity of medium term financing for the auto leasing industry in Turkey and to promote the development of operational leasing in Turkey. The lack of funding for the auto leasing industry results in overall higher cost of funds for the leasing companies, lost opportunities for financial sector development and hinders growth of the economy. By providing IFC’s stamp of approval, which is traditionally well regarded in Turkey, to an operational leasing company, this investment is expected to have a catalytic effect in encouraging other financial intermediates to consider operational leases as an alternative financing instrument. For many years, operational leasing, while allowed under Turkish leasing laws, was until recently significantly disadvantaged due to disproportionately large tax benefits for financial leasing. On July 1, 2003, however, Turkish financial standards were harmonized with IAS, and from that date, the tax advantages for financial leasing were removed. The growth and success of Intercity will contribute significantly to the overall growth of operational leasing in Turkey. This project also fits IFC ‘s strategic objectives of playing a catalytic role in attracting additional foreign capital to Turkey. IFC will be able to leverage its investment and attract additional funds to the transaction, via the proposed IFC B Loan umbrella, which will enable international banks who otherwise will be risk averse to investing in Turkey to be more inclined to invest in this project.
IFC’s support of Intercity will help the company expand its leasing activities as well as further develop its internal management and technical systems. IFC’s credit line will provide needed financing to Intercity in an environment where access to long term financing is limited. At the same time, the demand for leasing far outweighs the supply provided by existing leasing companies. |
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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 Reviews of Projects, because a limited number of specific environmental and/or social impacts may result which, can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or designed criteria.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
Environmental documents are located in the company’s headquarters and main service center at:
Dudllu Organiza Sanayi Bolgesi
3 Cadde, G0131 Sok. No: 26
34775 Yukan Dudullu
Istanbul, Turkey |
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| To contact the project company, please write to: |
Mr. Francis Kalitsi, Investment Officer
IFC, 2121 Pennsylvania Avenue
Washington, DC 20433
fkalitsi@ifc.org
or
Mr. Seymur Tari, Director,
Intercity
seymur@turkven.com |
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