Project detail - Mediterra Capital Partners III LP

Who is our customer

Mediterra Capital Partners III LP (the “Fund”, “MCP III”) is a Turkey-focused private equity fund and the third fund managed by Mediterra Capital Partners (the “Fund Manager”, “Mediterra”), an established private equity firm investing in Turkey since 2011. FMO has an existing relationship with Mediterra, having invested in both predecessor funds established to date, Mediterra Capital Partners I LP (“MCP I”) and Mediterra Capital Partners II LP (“MCP II”). FMO intends to invest at least EUR 15mln at MCP III’s first close.

What is our funding objective?

MCP III will pursue the same investment strategy as its predecessors, taking mostly majority stakes in high-growth companies in Turkey’s lower mid-market. The Fund will invest in businesses across three themes: technology driven (B2B), consumer driven (B2C) and export driven (B2E) firms. The funding objective is to support the Fund in reaching its target size of EUR 165mln.

Why do we fund this investment?

FMO is supporting a well-established and experienced fund manager in Turkey. The Fund will contribute to enabling access to equity financing, especially in the lower mid-market. Beyond the Istanbul area, the Fund also focuses on the wider Anatolia region, which is relatively underserved. By participating in the Fund’s first close, FMO will send a positive signal to other potential Limited Partners. FMO will thus play a catalysing role in helping the Fund attract other investors (DFIs and private investors) and reach its target size and objectives.

What is the Environmental and Social categorization rationale?

MCP III is categorised as a B+ fund. The risk categorisation is based on their current pipeline, which is expected to include around 4-5 B+ opportunities following a review and further clarifications from the Fund Manager. Higher risk opportunities lie in the sectors of manufacturing with potentially hazardous materials, agriculture and energy. Meanwhile, other opportunities have the ambition to construct new production facilities. These investments trigger risks related to IFC Performance Standards (PS) 1-4, with in some cases key risks in the supply chain. Although unlikely given information at this stage, PS 5 and 6 risks due to land acquisition and land use change could be present. PS 7 and 8 are currently not anticipated to be triggered.