Investment expected to help create up to 240 new jobs
Washington D.C., August 28, 2001
─The International Finance Corporation, the private sector arm of the World Bank Group, has signed an agreement to invest US$10 million in Gunkol, a leading Turkish manufacturer and exporter of cooking appliances. The IFC investment is intended to support the medium-sized company’s expansion efforts, enhance manufacturing efficiency, and raise export capacity.
Sujata Lamba, IFC’s Country Manager for Turkey, said IFC is pleased to support a new client in Turkey, particularly since Gunkol is a medium-sized company that normally has limited access to long-term financing. She said the investment is highly export-oriented and will help create up to 240 new jobs both directly and indirectly through local suppliers. She said the investment is in line with IFC’s current efforts to support medium-sized Turkish companies with long-term finance and make them less dependent on short-term debt, adding that the investment reflects IFC’s commitment to comprehensive coverage of Turkey at a time when private sector support is critically needed.
Gunkol, part of the Turkish Teba group, has exported its products to more than 80 countries since the early 1980’s, but increased global competition requires technology improvements and manufacturing cost reductions to remain competitive. With these improvements to go along with new product developments, Gunkol will be poised to benefit from the increasing international demand for low-cost cooking appliances. The IFC investment will help Gunkol raise the company’s cooking range manufacturing capacity from 360,000 units to 700,000 units.
The project is located in Izmir, Turkey’s third largest city. Izmir is also the second largest port in Turkey with a free trade area for exports. The investment will involve the relocation of an old plant to a new location near Izmir airport within an industrial zone.
The total project cost is estimated at $24 million. IFC will provide a US$10 million long-term credit at commercial rates to the company. The rest of the investment will be met through the sponsor’s own equity.
Turkey is an important country for IFC, the fourth largest exposure accounting for about 4.5% of IFC’s global portfolio. IFC’s held portfolio, including amounts mobilized from commercial banks, is close to $1 billion. IFC’s program for Turkey continues to be active with investments in projects of about $400 million. This follows an international syndication for a Turkish client in April 2001.
The mission of IFC, part of the World Bank group, is to promote sustainable private sector investment in developing countries as a way to reduce poverty and improve people’s lives. IFC finances private sector investments in emerging markets, mobilizes capital in the international financial markets and provides technical assistance and advice to governments and businesses.