47286 - Mediterra III

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Summary of Investment Information

Project Number

47286

Company Name

MEDITERRA CAPITAL PARTNERS III LP

Date SPI Disclosed

Apr 10, 2024

Country

Turkiye

Region

Central Asia and Turkiye

Projected Board Date

May 15, 2024

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jul 28, 2024

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Jun 6, 2024
Signed : Jun 18, 2024
Invested : Jul 23, 2024

Sector

Growth Equity Fund

Project Description

The proposed project consists of an IFC equity commitment of up to EUR 25 million to Mediterra Capital Partners III LP (MCP III or the Fund) a closed-end private equity fund targeting investments in Türkiye. The Fund will be domiciled in Guernsey with a target size of EUR 165 million

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	48.83

Development Impact

The Fund is expected to increase access to private equity capital and value creation for companies in Türkiye. Following the 2018 Lira crisis, Türkiye has experienced a notable downturn in private equity investment causing limited access to equity capital. Within this context, Mediterra will provide growth capital to mid-market companies in the country and support value creation in its portfolio through management improvement, expansion strategies and optimizing operations. Additionally, it will assist companies with macroeconomic risk management and facilitate stress testing, focusing on pricing, financials, and foreign exchange. Beyond the project, IFC will support the PE market to remain functioning and provide capital to growth stage companies after a decline in investment due to macroeconomic and political uncertainty. Protracted growth and poor commercial returns have driven many investors and fund managers out of the market, leaving a limited number of active players. IFC’s investment with Mediterra III will support one of the mid-market fund managers to sustain activity and sends a signal to other funds seeking to raise in the region. This signal builds on IFC’s recent support to other funds in the region and will help to sustain activity during the current environment, support market recovery by preserving critical market capacity, and encourage commercial investors to return to the market.

IFC’s additionality is both financial and non-financial. IFC's financial support will be required for the fund to achieve its first close as macroeconomic challenges such as Lira devaluation and inflation in Türkiye have reduced fundraising activities and increased investor’s risk perception. IFC will also support the fund manager by mobilizing equity capital for the fund. IFC will provide non-financial additionality to the Fund Manager in setting gender standards and promoting improved gender practices through IFC’s Invest2Equal program.

E&S Category Rationale / Risks and Mitigation

The project will support mid-cap companies in Turkey focusing on export driven manufacturing, B2B services, industrials, technology and logistics sectors which are expected to have potential limited adverse environmental and/or social risks or impacts that are few in number, generally site specific, largely reversible, and can be readily addressed through mitigation measures. Therefore, the proposed Project has been classified as a Category FI-2 project according to IFC Sustainability Policy. The Fund will not invest in any activities on IFC Exclusion List, coal-related activities, and/or higher risk business activities that may include a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant occupational health and safety risks. IFC’s applicable E&S requirements for this Project will be the IFC Exclusion List, the host country laws and regulations and the IFC's Performance Standards.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Sistem Global	Turkiye	Y-YY- Non-Sector Specific Advisory Services

Mediterra Private Equity Limited ("the Manager", or "Mediterra"), is an existing Fund Manager, which currently manages Mediterra Capital Partners I LP ("Fund I") and Mediterra Capital Partners II LP ("Fund II") in which IFC invested in 2012 (project #31623) and 2016 (project #37507) respectively. The main risks associated with the Fund’s investments are related to labor and working conditions, effluent management, waste management, occupational health and safety, stakeholder engagement and community health, safety and security. All of the above risks can be managed and/or mitigated by the Fund conducting adequate due diligence in line with its existing ESMS. Mediterra developed and implemented an ESMS that includes policy, procedures, responsibilities and tools for undertaking E&S risk management in addition to training relevant staff. E&S due diligences in line with the IFC Performance Standards are performed by external E&S experts. For potential investees with E&S gaps, a corrective action plan is designed, included in legal documentation and monitored constantly. The fund has an External Communication Mechanism. The fund has an ESG manager and an E&S officer responsible to lead the ESMS implementation at the operational level. For this Fund, Mediterra will be required to continue implementing the ESMS in line with the IFC’s applicable E&S requirements, and submit a periodic report to IFC.

Contacts

For Inquiries About the Project, Contact

Mediterra Capital Partners
Bertan Kareimer
CFO

info@mediterracapital.com
1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey, GY1 2HL
https://www.mediterracapital.com/

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