Turkish oil processor Reka bags €45m EBRD loan

The firm, which has gone from a start-up in 2010 to become the largest processor by crushing and refining capacity, signed the loan agreement last week, with EBRD providing €25m of the funds and Dutch development bank FMO providing €20m as a syndicated lender. Along with expansion, Reka will use the funds to restructure its finances.

Lining up capacity​

“The loan is expected to be used for balance sheet restructuring, and for further investment in their production facility in Tekirdağ, which will increase their refining capacity, and also add some additional lines which will increase the efficiency of their production​,” said Nadia Petkova, a senior banker for agribusiness at the EBRD.

“The loan will be utilised in full within the next month or so. I think some of the investment will be ongoing until mid next year – it will be a period of implementation, as they need to pre-order the lines, so the investment will be completed by the end of the first half of 2016​,” she added.

Reka was formed in 2010 by the Reka and Kucukbay families, both with a history of trading in edible oils. Its Tekirdağ facility, in the north-east of Turkey, is close to the country’s main sunflower and rapeseed growing regions, and the company buys most of its seeds from local producers. The EBRD loan will also allow Reka to work with more local farmers, as its capacity grows.

Petkova said the size of the €45m loan was above average compared to the EBRD’s average ticket size of around €30m, and larger than most of its agribusiness sector loans – but she also noted projects in Turkey tended to be larger, simply as a function of the country’s size.

Consolidation to come​

She said the EBRD has been looking at a wide range of agribusiness sectors in Turkey in addition to edible oils, including meat, dairy and tea. Looking to the future, she predicted Turkey’s agribusinesses would see significant consolidation.

“Turkey is positioning itself as a protein hub for the region, and it’s exporting more and more to the Middle East and Africa – so in order for them to become more competitive, they need to integrate and increase the size of the producers​,” said Petkova.

“So consolidation is the trend in the agribusiness sector. But on the pure agricultural side, there is a big structural problem in the country, which it is working on overcoming – but the average farm size in Turkey is extremely small, both on the cattle-breeding side, as well as farmers growing crops​,” she added.

According to Petkova, Turkey’s recently-enacted land law will help slow the fragmentation of land, and the EBRD is also working with the government to improve the sector: “We have a policy dialogue with the Ministry of Agriculture on this subject, trying to help them optimise, and make the protection system in the agribusiness sector more effective and more efficient. But this is a long process​.”