FAB is a step closer to acquiring a 61.2% Stake in Yapi Kredi: First Abu Dhabi Bank (FAB) is reportedly advancing in its discussions with Turkish industrial conglomerate Koc Group about a potential takeover of its 61.2% stake in Turkey's fourth-biggest private bank Yapi Kredi for USD 8 bn, Reuters reports, citing three undisclosed sources close to the matter. Talks are now being finalized after “several months of negotiations,” which initially saw FAB offer to pay USD 7.5 mn for the stake, while Koc sought out USD 8.5 bn.

Disagreements over the bank’s valuation could throw a wrench in the works, Bloomberg reports, citing people in the know. Koc is still reportedly seeking a higher price than what FAB is currently willing to offer. Due to these disagreements hampering the stake sale, FAB has not formally begun due diligence on the stake, despite negotiations being ongoing for several weeks now, according to the sources. While neither lender has tapped an adviser, the banks are still moving forward with the talks.

The Turkish lender’s market was valued at USD 7.5 bn earlier this month, though its value has now gone up to USD 10 bn, after shares rallied 10% yesterday. FAB’s USD 8 bn bid would value the bank at USD 13-14 bn.

Current ownership: Koc Financial Services holds a 41.0% stake in Yapi Kredi, while Koc Holding holds a little over 20.22% in the Istanbul-based commercial banking company.

What’s next? While declining to comment on the acquisition, the Emirates’ biggest lender acknowledged “the recent media speculation,” in a disclosure (pdf), adding that the bank is focused on “executing its growth strategy.” The lender also said that it could be holding talks “on growth potential to its operational network.” Meanwhile, Koc Holding confirmed in a statement to the Istanbul bourse that it is in preliminary talks to sell Yapi Kredi shares. Koc also said it holds the option to negotiate “possible alternatives” in its portfolio, signaling that the FAB sale is not final.

FAB has been eyeing the Turkish bank for some time: FAB mulled an acquisition of Turkish lender Yapi Kredi, valued at USD 7.6 bn, in April, as part of its global expansion strategy.

REMEMBER- Ties between the UAE and Turkey have warmed as of late: Last year, the UAE inked over USD 50 bn in agreements with Turkey during a visit from Turkish President Recep Tayyip Erdogan, including commitments to develop energy and natural resources projects and a trade agreement. Dubai Islamic Bank has also shown interest in Turkish investments, announcing in September that it plans to purchase a 20% stake in Turkey's TOM Group of Companies.

FAB also has its eyes on an Indian lender: FAB reportedly sought to acquire a 25% stake in Yes Bank, India's sixth-largest private sector lender, earlier this month. The lender held talks with the Reserve Bank of India, India’s central bank, to discuss the potential transaction.

IN OTHER M&A NEWS-

Al Mal Capital adds a Dubai school to its portfolio: Al Mal Capital’s real estate investment trust’s (REIT) board approved the purchase of a school in Dubai for a total of up to AED 415 mn, according to a DFM disclosure (pdf), without disclosing the name of the school. The transaction will see the REIT acquire the British curriculum school at an estimated value of AED 395 mn, with the financial costs amounting to up to AED 20 mn. The new acquisition brings the asset manager’s portfolio value to approximately AED 1 bn.

Background: The Dubai-based asset manager unveiled in April its plan to acquire an AED 400 mn educational asset as well as a healthcare facility later in the year.

REMEMBER- The Dubai-investments unit underwent an AED 180 mn capital increase last month, bringing the REIT’s total capital to over AED 540 mn.

SOUND SMART- A REIT or a real estate investment trust is a mutual fund that owns, finances or manages income-generating real estate assets — commercial, residential, office, and other properties. Some will also invest in real-estate-related securities or private equity transactions that are directly related to the industry.

What’s next? The REIT could kick off another capital increase in 4Q 2024, with plans to up the number of units available to 1.5-1.8 bn units by year-end, Al Mal Capital MENA Direct Investments Director Sanjay Vig previously said.

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