November 14, 2016
Turkey Sovereign Fund – Details Revealed
As previously reported, Turkey has established its Sovereign Wealth Fund (Türkiye Varlık Fonu) (the “Sovereign Fund“) and the Turkish Sovereign Wealth Fund Management Incorporation (Türkiye Varlık Fonu Yönetimi Anonim Şirketi) (the “Asset Manager“), its asset management company. On November 9, the Council of Ministers’ decree regarding the Asset Manager’s operating principles(“Decree“) was published in the Official Gazette.
The key takeaways concerning the Decree are as follows:
- The Asset Manager will principally manage the Sovereign Fund and its sub-funds (“Funds“). The Funds will engage in project fundraising and development, extending loans for foreign projects, and forming local and international partnerships.
- The Asset Manager, the SPVs and other companies to be established by the Asset Manager, and the Funds will be audit by institutions that are licensed by the Capital Markets Board (the “CMB“) to audit.
- The resources of the Sovereign Fund are:
- The institutions and assets within the scope of the privatization program, as well as the Privatization Fund’s excess cash that the High Board of Privatization agrees to transfer to the Sovereign Fund;
- Surplus income, resources and assets at the disposition of public institutions and organizations that the Council of Ministers decides to transfer to the Sovereign Fund;
- Funds and resources acquired by the Sovereign Fund from the national and international capital and money markets; and
- Funds and resources acquired outside the capital and money markets through other methods.
- The assets of the Sovereign Fund and the assets transferred to the Asset Manager for its management will be segregated from the Asset Manager’s own assets.
- Save for the functions and transactions concerning the activities that the Funds are authorized to engage in, the Sovereign Fund’s assets cannot be provided as collateral, pledged, or otherwise disposed of, attached or subject to injunctions, included in the bankruptcy estate in the event of bankruptcy, even for the collection of public receivables.
- In order to appraise the value of real estate, real estate projects or rights in connection with real estate, the Asset Manager may consult with real estate appraisal companies approved by the CMB.
Turkey is actively pursuing its ambition to develop a sovereign fund financed by its excess and idle funds. The Decree further delineates the Asset Manager’s and Funds’ operations in addition to prior existing laws. The Sovereign Fund is expected to conduct activities utilizing the financial resources it receives, as well as privatized and real estate assets.