Dogus Holding wins Galataport tender with sole bid at auction

By bne IntelliNews May 17, 2013

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Local conglomerate Dogus Holding made the highest bid in the latest in a series of major infrastructure tenders in Turkey, as it bid $702m for the right to develop and operate Istanbul's Galataport. The final step to win the tender looks to have been curiously easy, despite rising interest in the sector.

The tender offers the right to operate the Istanbul Salipazari Port Area - commonly known as Galataport and located on the European side of the Bosphorus Strait - for 30 years. Development will include the construction of hotels, shopping centres and a cruise-ship terminal.

The other bidders shortlisted in the tender - Alsim Alarko and a consortium featuring Global Yatirim Holding, Ozak REIT, and Delta Insaat - swiftly gave up the ghost at the final auction, according to Hurriyet Daily News, to allow Dogus to take the prize with an offer just $1m above the initial price of $701m. The Polimeks-Folkart-Sembol consortium and the Torunlar Real Estate Investment Trust had fallen out of contention in an earlier elimination phase.

"The project will add to Istanbul's brand value amid its Olympic bid," Dogu_ Holding CEO Husnu Akhan told journalists. He added that the company expects investment costs of $350-400m.

Like many other Turkish infrastructure projects, Galataport has struggled during a long privatisation process, with financing issues having plagued the sector for some time, resulting in many deals falling through after being agreed. The Turkish Privatization Authority initially agreed to lease Galataport out for 49 years in 2005, but that deal was later overturned.

However, the strides being made by the economy, and associated bubbling sentiment, has seen the availability of funding vastly improve this year. That has pushed through several large deals in the last six months, with some worrying that the pendulum may have swung too far the other way.

Analysts were stunned earlier this month at the high price of $22bn that won the tender for Istanbul's third airport. The consensus is that the consortium of Turkish construction companies that placed the bid will struggle to make the project work economically at that price.

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