Bridgepoint acquires joint controlling stake in Turkish vehicle inspection group TüvTurk

TüvTurk was established in 2005 when a consortium comprising TÜV SÜD, a German vehicle and industrial inspection business, Akfen, a Turkish infrastructure operator, and Doğuş a large Turkish conglomerate won a tender from the Turkish Privatisation Administrators for a 20 year concession to operate vehicle inspection stations in Turkey. The company operates 189 stations across the country and has franchised its operations across 81 regions to 46 franchisees but TüvTurk shareholders retain ownership and operation of the largest region, Istanbul.

Existing banking facilities to TüvTurk remain in place for this transaction. Banks involved include Bayerische Hypo - Und Vereinsbank AG, Garanti Bank, Finansbank and Vakıfbank.

According to Martin Dunn, Director responsible for Bridgepoint's Turkish investment team, TüvTurk is a high quality, cash generative, stable business with long-term growth potential as enforcement of compulsory testing converges toward EU norms and car ownership levels increase. "TuvTurk is a robust business in a growing sector with a high performing management team and institutional shareholders who understand the vehicle inspection and domestic Turkish automotive markets extremely well." he said.

Prior to the establishment of TüvTurk, vehicle inspections were carried out by the General Directorate of Highways. After the acquisition, TüvTurk invested in 189 greenfield, purpose-built inspection sites. The inspection regime is set by Turkish law under which it is mandatory for passenger cars to be inspected biennially after three years from first registration; commercial vehicles must be inspected annually.

Under the terms of the concession agreement, which expires in 2027, TüvTurk pays a percentage of the inspection fees collected to the Turkish Government. For its part, TüvTurk receives a percentage of inspection fees under the agreements with franchisees.

Bridgepoint's investment in TüvTurk will be made from Bridgepoint Europe IV, the €4.85 billion fund it closed in April 2009. Bridgepoint already has significant experience in the European vehicle inspection market through its investment in A-Katsastus, the leading Northern European vehicle inspection company based in Finland but with operations in Belgium, Denmark, Latvia, Poland, Estonia and Russia. Since acquisition, the company has doubled profits and made ten add-on acquisitions to the business. Bridgepoint's investment in TüvTurk is completely independent of its investment in A-Katsastus.

Advisers involved in this transaction include: for Bridgepoint: Goldman Sachs (corporate finance), Booz & Co (commercial), PWC (accounting), Hergüner Bilgen Özeke (legal - Turkey), Travers Smith (legal - international), ERM (environmental); for Akfen: Ata Invest (corporate finance), Pekin & Bayar (legal).