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Why the Turkey Wealth Fund is looking to Asia

Zafer Sönmez was well underway with a long-term plan to model Turkey’s sovereign wealth fund on Singapore’s Temasek and Malaysia’s Khazanah – his former employer – when he was unexpectedly removed from his role in March. Before going, he gave Euromoney a detailed interview on the challenges involved in building a wealth fund in a country that is not blessed with oil wealth, plentiful foreign exchange reserves or even budget surpluses. Those challenges will remain after his departure.

Modern Skyscrapers in Levent Business District, Istanbul, Turkey
Source: Getty Images

My ambition,” says Zafer Sönmez, “is to place Turkey Wealth Fund as one of the leading sovereign wealth funds in the CEEMEA [central and eastern Europe, Middle East and Africa] region. In terms of governance, in terms of deal making, in terms of human talent, we want a place in the top quartile of sovereign wealth funds.”

These are big calls for a fund that faces a lot of challenges. When Sönmez became chief executive in 2018, he took on a new institution – it was legally formed in 2016 but was only given control of most of its underlying assets the following year – that lacked many of the advantages of other sovereign wealth funds around the world.

Turkey doesn’t have bounteous hydrocarbon income to seed a fund, or surplus foreign exchange reserves. In many months it runs twin deficits, current account and budget, so there is not a lot of spare cash there either.

Covid has made things worse, putting huge pressure on government finances, the currency and the performance of the Turkish economy.

I noticed something is missing in my territory, Turkey, versus Asia.

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Chris Wright is Asia editor. He covers the Asia Pacific region and is based in Singapore. He has previously been Middle East editor of Euromoney, editor of Asiamoney, investment editor of the Australian Financial Review and a correspondent on emerging markets and sovereign wealth for numerous publications worldwide. He has also written two books.
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