MICROCAPITAL BRIEF: Garanti Leasing Borrowing $26m from EFSE to Finance Micro-, Small Enterprises in Turkey

The European Fund for Southeast Europe (EFSE), a microfinance investment vehicle domiciled in Luxembourg, recently announced it is lending EUR 25 million (USD 26.5 million) to Garanti Leasing, a subsidiary of Turkey-based Garanti Bank, to facilitate increased support for micro- and small enterprises in Turkey. Garanti Leasing plans to utilize half of the investment in government-designated “Priority Development Regions.” Garanti Leasing has worked with EFSE since 2012.

Garanti Bank has been operating since 1990, and it established the subsidiary Garanti Leasing in 2010 as the successor to Motoractive, which it rebranded internally. Garanti Leasing serves both small and large enterprises with financing for investments including inventory; real estate; vehicles; and equipment for agriculture, textile production, printing and construction. In 2015, it reported USD 800 million in transactions via 3,000 contracts. Garanti Bank reports assets of USD 89 billion and annual net income of USD 1.5 billion as of December 2016.

EFSE provides “long-term” funding in Southeast Europe and parts of Central Asia to financial institutions that serve micro- and small enterprises as well as private households. EFSE also operates a development facility through which it provides consulting and training services to these institutions. EFSE was established in 2005 by German development bank Kreditanstalt für Wiederaufbau (KfW) with the financial support of the EU’s European Commission and the German Federal Ministry for Economic Cooperation and Development, which is also known by its German acronym BMZ. The fund is privately managed, with Oppenheim Asset Management Services of Luxembourg acting as fund manager and Finance in Motion GmbH of Germany acting as fund advisor. EFSE operates in 16 countries: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Kosovo, Moldova, Montenegro, Romania, Serbia, Ukraine, Turkey and the Former Yugoslav Republic of Macedonia. As of 2017, EFSE holds a microfinance label from Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised. As of 2016, EFSE reported a gross loan portfolio of EUR 957 million (approximately USD 1.0 billion).

By Phoebe Rorke, Research Associate

Sources and Additional Resources

EFSE, Garanti Leasing renew focus on Turkey’s ‘Priority Development Regions’

EFSE Lends $2m to VisionFund’s SEF International for Micro-, Small Enterprises in Armenia

European Fund for Southeast Europe (EFSE) Loans $34.6m to Garanti Leasing for On-lending to Micro-, Small Enterprises in Turkey

Garanti – 2015 Annual Report

Garanti Bank – 2016 Selected Financials

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