Turkey transfers state assets to sovereign wealth fund

Istanbul: The Turkish government has ordered the transfer of tens of billions of dollars worth of state assets to a sovereign wealth fund, in a huge shake-up of its holdings aimed at financing ambitious infrastructure projects.

The assets being transferred to the sovereign wealth fund range from wholly state-owned Ziraat Bank to the government's minority shareholding in flag carrier Turkish Airlines.

"The existing management and business plans of the companies will continue, as will cooperation with all relevant stakeholders, including international financial institutions," the government said in a statement late yesterday.

Included in the transfer are the government's stakes in privatised companies including Turkish Airlines, where the state has a 49.12 per cent holding, and lender Halkbank, where it has 51.11 per cent. Also moved is the stake of around 7 percent in Turk Telekom.

State-owned enterprises including Ziraat Bank, natural gas distributor BOTAS, the PTT Turkish post office and the state tea producer are also being moved to the wealth fund.

The fund was established in August 2016 but this is the first time that significant businesses have been transferred under its control. It was already controlling horse racing and lottery assets.

Ozgur Altug, economist at BGC Capital in Istanbul, said he estimated the value of the transferred assets to be USD 33 billion. The change means that the fund will receive dividends from the assets rather than the government budget, he said in a note to clients.

Turkey is following in the steps of several countries in putting key national assets into a sovereign wealth fund, which can be used for major projects, maintaining pensions and national welfare programmes, or in times of crisis.

But Ankara's fund is well behind the biggest sovereign wealth funds in Norway, the Gulf and China.

Norway's sovereign wealth fund is the world's largest, worth USD 892 billion and holding stakes in around 9,000 companies worldwide.

When Turkey's fund was founded in August, the state-run Anadolu news agency said it would be used to fund "mega projects" such as the planned Istanbul shipping canal and a new three-level tunnel under the Bosphorus.

President Recep Tayyip Erdogan fondly refers to such plans as his "crazy projects" aimed at transforming infrastructure to create a "new Turkey".
Anadolu said in August the fund aimed eventually to have a value of USD 200 billion.