Co-ordinating banks Akbank and WestLB have jointly arranged with the IFC a €865mn debt package for Turkish joint venture power company, Enerjisa Enerji Uretim. It forms part of a €1.44bn financing for the initial phase of the company’s investment programme.

The financing package is the largest international transaction for a private company in Turkey that will sell into the country”s deregulated power market.

The first phase of the investment programme will develop the company’s capacity to generate 12,000GW-hours of electricity a year, potentially reaching 5.7mn consumers. The project will involve the construction of 10 hydroelectric power plants in Cambasi, Ceyhan and Seyhan basins, and a natural gas-fired thermal plant in Bandirma, with a total capacity of 1,900MW.

The deal was structured into two tranches, with IFC arranging the €513mn A tranche, which includes senior and subordinated loans of €158mn carried on its account.

The B loan of €355mn has been jointly arranged by Akbank and WestLB. The facility carried a 12-year tenor and was syndicated out to international investors. Joining the mandated lead arrangers during syndication were KfW IPEX Bank, Bank Austria Creditanstalt, Erste Bank, ING Bank, RZB, and Société Générale.

In addition, Akbank arranged and underwrote a parallel financing of €352mn, with a 12-year maturity, with National Bank of Greece/Finansbank joining as an additional mandated lead arranger.

Enerjisa is owned jointly by Haci Omer Sabanci Holding and Verbund Österreichische Elektrizitätswirtschafts-Aktiengesellschaft, the equity providers. The two investors teamed up to run Enerjisa in May 2007. The company was first established in 1996 by Sabanci Holding. Enerjisa is planning to purchase electricity distribution grids as the privatisation process of Turkey’s electricity sector continues.

In an official statement, Selahattin Hakman, energy group president of Sabancı and chairman of Enerjisa, comments: “Starting with this landmark financing package, we intend to have a 10% share of the Turkish electricity market by 2015. With an installed capacity of more than 5,000MW, we will help to overcome the supply bottleneck in this sector. “Together with our partner Verbund, we aim at developing further generation, distribution and supply as well as wholesale or trading of electricity in Turkey.

She adds: “We are confident that a fast development of the liberalisation in the Turkish power market, including the privatisation of the distribution companies and the generation assets, will make it possible for us to increase our contribution to overcome the upcoming supply-bottle-neck in this sector.”

The electricity market in Turkey is one of the fastest-growing markets in the world, with the country’s consumption of electricity thought to be rising between 8 and 10% every year, with this rate only set to increase over the coming decades. The country is presently highly dependent on imported natural gas supplies for about half of its power need, and may well have to begin importing electricity as well to meet demand. Since the initial wave of build-own-operate (BOO) projects and (independent power producers) IPPs between 1997 and 2001, there hasn’t been any substantial investment in the sector, resulting in expected supply shortages in 2009.

Over recent years, foreign direct investment has flooded into Turkey, but recent political and economic events have made some investors more wary. The country has seen the effects of global tightening on liquidity, but its unstable political situation is also raising concerns, with the leading Justice and Development Party (AKP) facing the possibility of being shut down by the constitutional court for some of its ‘non-secular’ approach to policy-making.

In addition, the privatisation of the electricity sector has been a drawn out process, with electricity distribution networks being fairly fragmented and need of acute investment.

Commenting on the multilateral’s involvement in the deal, Rashad Kaldany, IFC director for infrastructure, remarks: “IFC is pleased to support the development of a merchant power operator in Turkey, as ongoing structural and regulatory changes have added uncertainty for prospective investors in the sector.”

Cem Mengi, executive vice president of corporate banking division of Akbank, adds: “We are also keen on financing the upcoming projects of Enerjisa, as we believe the company is a very promising candidate to become one of the blue-chip energy companies of not only Turkey, but the region, with its well diversified portfolio, know-how and strong sponsors.”

In a similar vein, Susan Vivares, co-head of EMEA energy markets for WestLB, adds: WestLB is pleased to be one of the lead banks on such an important deal for Turkey’s private power sector. We look forward to supporting Enerjisa, a pioneer in the energy industry, as it aims to supply power to new markets and grow its business.”