42.79 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	42.79
Equity

* These investment figures are indicative

Economywide effects-Increasing exports through value addition: Automotive (auto parts) industry is one of the primary drivers of Turkey’s exports and economic growth. In 2020, exports of vehicles and vehicle parts amounted to US$22.7 billion, representing 13% of total exports of goods and services. Vehicle parts, in turn, amounted to US$4.6 billion or 3% of total exports. Through the Project, the Company will increase its exports, directly contributing to improving Turkey’s current account deficit (CAD) – particularly important amid the volatile macroeconomic context experienced recently by the country. The Project is anticipated to contribute to the Turkish economy by both direct value addition, as well as through indirect effects induced in the value chain. Finally, IFC anticipates that through increased backward linkages, the Project will contribute to indirect employment in Ege Endustri’s supply chain. Integration: The automotive supplier industry is well developed in Turkey. In 2020, overall vehicle parts represented 2.6% of Turkish exports, valued at US$4.6 billion. The most important challenges faced by Turkish automotive suppliers are (i) subdued adoption of new technologies, which may result in lower value-added products and associated decline in margins, given the increase in global demand for technology-based products and (ii) limited strategizing and investment to develop the necessary capabilities and positioning to remain competitive in the future. It is imperative for the Turkish automotive supplier industry to prepare for the transition from traditional systems to higher-technology adoption, per the market dynamics as global automotive OEMs are ramping up their production of electric vehicles (EVs) and hybrid engine models. Ege Endustri has emerged as one of the leading players among Turkish automotive suppliers, through continuous investment in technology, research and development, cost competitiveness and capacity expansion. IFC’s Project will build on Ege Endustri’s ongoing strategy for the electrification of its products. The consolidation in a single facility of two existing plants and adoption of robotic equipment for automated manufacturing technology will enable the Company to achieve economies of scale and increased cost-efficiency, expanding the output capacity to produce axles and suspensions for e-trucks. The success of the Project will provide demonstration effects to other automotive suppliers in Turkey to improve their cost-efficiency, enhance operating standards, and expand capacity for local production of higher-technology products, which can potentially strengthen their forward linkages and integration with global OEMs. The Turkish automotive suppliers will be incentivized to follow suit, amid increasing pressures in the global supply chain as automotive industry leaders gradually increase the electrification of their products. Furthermore, in the long-term, Ege Endustri’s capacity expansion for e-truck components has the potential to support local OEMs of electrified heavy commercial vehicles in Turkey.

-Financing structure: The proposed engagement will enable IFC to perform its countercyclical role in the current volatile market environment in Turkey where the liquidity is strained. IFC will be providing a EUR corporate loan with a tenor of 8 years. The proposed IFC Loan will enable the Company to reduce its funding risk by providing a longer tenor and diversifying its funding base. -Standard setting: The Project will give IFC the opportunity to reassess the Company’s E&S policies and practices in detail and introduce corrective actions where necessary to bring them to international standards.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.