FMO signed a USD 25 mln facility to AKLease, which will be used to provide financing of renewable energy and energy efficiency projects in Turkey. During the current COVID-19 turbulence in Turkey, FMO shows it sustained support to existing clients with providing long-term USD-funding.
The Turkish economy struggles not only with COVID-19, but also with macroeconomic challenges as high inflation rates and sustained pressure on its currency. On top of economic challenges, Turkey also faces challenges from a sustainability perspective in realizing its commitments to sustainable development goals. Turkey still needs to delink its GDP-growth and GHG-emissions via increasing the share of renewables in its electricity mix and investing in energy efficient solutions. Via its financing, FMO contributes to both challenges. The environmental impact of the investment, which will mostly be used for on-lending to solar energy projects, is approximately 12.000 ton avoided GHG emissions per year; an equivalent annual emission of almost 3.000 cars.
The financial leasing market in Turkey has grown fast since 2012, when the legislation of financial leasing has been adjusted, but has still growth potential. The penetration rate is still substantially below the EU level. FMO provides a 5 year loan to AKLease, a subsidiary of AKBank, Turkey. AKLease is an existing FMO customer since it provided a EUR 110 mln syndicated loan facility in 2017.
With the new facility, AKLease will be able to grow its lease portfolio in particular in the areas of Renewable Energy (mainly solar panels) and Energy Efficiency, which still offers an attractive growth market in Turkey. Also due to increase energy prices (in particular in local currency) investments in these sectors have become more attractive in recent years. AK Lease aims to grow its portfolio share to these assets from 12% to 15%, and to become one of the leading leasing companies in these ‘green markets’. AK Lease was also the first financial leasing company in Turkey which entered into wind turbines and is currently one of the top-5 leasing companies in Turkey with a total lease portfolio of USD 789 mln and a market share of approximately 10%. Lease contracts to this type of projects require long-term funding and market expertise. The competitive advantage of AKLease in this market is its well-developed network of equipment suppliers and its good access to long-term Development Finance Institution-funding, also due to its sustained commitment to high Environmental and Social standards. These standards will be further improved also due to FMO’s involvement.