Turkey Retail Sector Update 2012 by Deloitte Turkey

1. Retail Sector Update
Corporate Finance
June 2012

3. 1
2011-2012 Transaction highlights
Deloitte Turkey Corporate Finance (DTCF) assumed various financial advisory roles in recent M&A
transactions in the retail sector in Turkey. DTCF advised clients on the sell-side and buy-side both in M&A
Advisory and Due Diligence Services as well as in valuation and market analyses. Selected engagements
are listed below:
Turkey
Vendor due diligence services
to a leading shoe retailing and
manufacturing group
Turkey
Sale advisory to a footwear
retail company
On-going Turkey
Sale advisory to an apparel
On-going
retail and manufacturing
company
Turkey
Lead financial advisor to Silk &
Cashmere
In its sale to Eastgate Capital
Group
Turkey
Vendor due diligence services
to YKM
Turkey
Acquisition advisory to a Gulf
based group regarding its
proposed acquisition of a local
department store chain
Discontinued
Turkey
Acquisition advisory to a Gulf
based group regarding its
proposed acquisition of a local
women’s apparel and footwear
retail group
On-going
Turkey
Review of the retail operations
of Café Crown
Regarding a joint -venture
establishment with Caribou
Coffee
Turkey
Due diligence services to
Naspers
Regarding the acquisition of
Markafoni
Turkey
Due diligence services to a
foreign retail chain regarding its
proposed acquisition of
Praktiker
Turkey
Vendor due diligence services to
a Turkish hosiery products
manufacturer and retailer
Turkey
Due diligence services to 212
Capital Partners
Regarding the acquisition of
balerin.com

4. 2
Industry trends
Macroeconomic Performance
According to the official figures, Turkey is the
18th largest economy in the world with a GDP of
US$772 billion in 2011. Due to the fragile global
economic environment as well as the need to
reduce the current account deficit, the Turkish
economy is expected to make a soft-landing in
2012 and to regain momentum in the following
years in a more sustainable manner. The economy,
which grew 8.9% in real terms last year, is
expected to grow by 3.5% in 2012.
Industry Commentary
The Turkish retail market is continuing its
sustainable growth in line with increasing
purchasing power per capita and the development
of modern and organized retailing. The per capita
private consumption of US$7,350 in 2011 is
expected to exceed US$10,000 by 2015. Strong
economic performance supported by a young
population stimulates growth in spending per
capita. As a consequence of the strong demand
from Turkish consumers, retail investments have
been experiencing great momentum in recent
years.
Thanks to a number of fueling factors, Turkey
became one of the most popular destinations for
foreign investors including private equity firms,
global supermarket chains, fashion retailers and
several other retail concepts.
A: Actual, F: Forecast
Source: EIU, Turkstat
648
732
615
735 772 778
886
1,006
1,122
1,224
4.7%
1.1%
(-4.7)%
8.9% 8.5%
3.5%4.0%
5.2% 5.3% 5.1%
-8%
-4%
0%
4%
8%
12%
0
200
400
600
800
1,000
1,200
1,400
US$million
Macroeconomic Performance
GDP (US$ bn) at Current Prices Real GDP Growth (%)
6,480
7,090
6,040
7,140 7,3507,640
8,470
9,330
10,210
10,990
0
2,000
4,000
6,000
8,000
10,000
12,000
US$
Private Consumption per Capita
CAGR (2012-2016)
= 9.5%

5. 3
The total size of the retail sector (organized and
unorganized) in Turkey is expected to reach
US$313 billion in 2012 and grow with c.10%
CAGR until 2016.
Organized retail, a highly promising segment
due to increasing per capita consumer spending
and relatively weaker presence up to now in
comparison with developed markets, is estimated
to be c.40% of the total retail industry in Turkey.
Limited total surface rent area, compared to
robust consumer demand and rapid urbanization,
triggered large scale retail investments across the
country. The number of shopping malls in Turkey
increased by more than 20% in the last two years
and reached c.300 at the end of 2011. In the
same period, the total surface rent area in Turkey
increased by more than 30% and reached c.7.3
million m2
.
Category Commentary
Food and Beverage
Food and beverage, which has the largest share
(c.52%) in the Turkish retail sector as of 2011, is
expected to grow at c.9% CAGR in the next five
years and reach US$233 billion in 2016.
Home Retail
The home retail market in Turkey, comprised of
household furniture and textile products, reached
c.US$48 billion in 2011. The market is expected to
grow CAGR c.10% in the next 5 years and reach
c.US$70 billion in 2016.
Apparel Retail
Starting from 2012, apparel sales in Turkey are
expected to grow CAGR c.12% and reach c.US$41
billion in 2016.
Consumer Electronics
Consumer electronics, having c.4% share in the
Turkish retail sector, are expected to grow by
c.65% in the next 5 years. Consumer electronics
spending per capita is also expected to increase by
more than 50% in the same period.
Internet Retail
According to the Interbank Card Centre, the total
value of e-commerce transactions was US$13.6
billion in 2011 which is 50% higher than in 2010.
Out of this US$13.6 billion, the consumer goods
internet retail market(*) amounted to c.US$1.3
billion and is expected to grow with a CAGR of
c.12% between 2012-2016, reaching c.US$2.3
billion.
* Excluding C2C sites, sales
of automotive products,
tickets for events and travel,
gambling, quick delivery of
food, magazines, household
goods, etc.
Food
52%
Non-Food
48%
Food vs. Non-Food
Organized
40%
Market Structure
Source: EIU
Unorganized
60%
143 155 133 156 158 164 185 202 217 233
121 133
115
139 144 149
170
187
204
224
0
100
200
300
400
500
US$billion
Retail Sales in Turkey
Food Non-FoodSource: EIU
264 288
248
295 302 313
355
389
421
457
CAGR: 3.4%
CAGR: 9.9%

6. 4
Industry focus:
internet retailing in Turkey
Internet Penetration
Internet penetration in Turkey has more than
doubled in the last 5 years and reached 45% in
2011. Mainly driven by the young population and
increasing income level, internet penetration is
also positively affected by discounted prices and
expanded coverage.
Turkstat’s household information technology usage
survey, conducted between January-March 2011,
reveals that 47% of internet users in Turkey used
the internet to find information on goods and
services whereas 7% purchased goods during the
period.
Internet Retail
Still in its infancy, the internet retail sector in Turkey
is growing at a remarkable pace through a number
of brand new initiatives and strong demand from
online consumers.
Data maintained by the Interbank Card Center, the
Turkish clearinghouse for bank cards, shows that
e-commerce transactions (including non-retail)
through virtual point of sales (VPOS) grew with a
CAGR of 60% in the past seven years and reached
c.23 billion TL in 2011.
According to e-commerce intelligence source
Internet Retailer, two Turkish companies appear in
the Top 150 internet retailing websites of Europe.
Hepsiburada.com (ranked 89th), a group company
of Doğan Holding operating as a mass merchant,
was the leading internet retailer in Turkey in
2011 with c. US$190 million revenue followed by
Markafoni (ranked 143rd), a pioneer online apparel
retailer, with a revenue of c.US$95 million.
Online apparel shopping clubs offering products at
discounted prices and deal-of-the-day websites are
popular destinations among Turkish internet users.
Increasing consumption through online media
shows that security concerns are not a headwind
for Turkish consumers as they were in the past.
According to the Interbank Card Center, there are
nearly 7,400 ‘‘3D Secure’’ registered virtual shops
in Turkey as of 2011.
Increasing activity of private equity investors and
venture capitalists with a focus on e-commerce is
becoming a dominant trend in the sector.
1,388
2,412
5,537
9,089
10,274
15,225
22,874
0
5,000
10,000
15,000
20,000
25,000
2005 2006 2007 2008 2009 2010 2011
millionTL
E-Commerce Transactions Through VPOS*
* Virtual Point of Sale
Source: The Interbank Card Center
30%
36%
38%
42%
45%
0%
10%
20%
30%
40%
50%
2007 2008 2009 2010 2011
Internet Penetration in Turkey
Source: Turkstat

7. 5
M&A snapshot
M&A Activity in Turkish Retail Sector
M&A activity in the Turkish retail sector had shown
a fluctuating trend in recent years when compared
to the global marketplace. However, by comprising
4.3% of the total M&A deal value, the Turkish
retail sector proved its potential in a year like 2011
where private sector activity was dominant.
There were 11 transactions(*) in the retail
sector in 2011, with an estimated deal value of
c.US$640 million. In the last five years, 37 retail
deals have been generated with an estimated value
of US$4.5 billion.
In the first quarter of 2012, the Turkish retail sector
saw profound activity through 5 deals(*).
Highlighted Transactions
February 2012 - Boyner, the leading department
store chain in Turkey has announced that it signed
agreements to acquire a 63% stake in its major
competitor YKM for a consideration of US$108
million.
December, 2011 - East Gate Capital Group, Dubai
based private equity and real estate investment
subsidiary of NCB Capital, made its first investment
in Turkey and acquired a 49.8% stake in Fabeks,
owner of the Silk & Cashmere brand, which is one
of the leading cashmere brands globally, for an
undisclosed sum.
June, 2011 - Gözde Girişim Sermayesi, private
equity investment arm of Yıldız Holding, acquired
99.6% of Şok Marketler from Migros for a
consideration of US$380 million.
May, 2011 - Kuwaiti investment company
Global Investment House acquired a stake in
Yargıcı, Turkish retailer of women’s apparel and
accessories, for an undisclosed sum.
3,799
2,936
2,073
2,434 2,564
138 59 41 49 77
3.6%
2.0% 2.0% 2.0%
3.0%
0%
1%
2%
3%
4%
0
1,000
2,000
3,000
4,000
2007 2008 2009 2010 2011
US$billion
Global M&A Activity
Total Deal Value Retail Deal Value
Source: Mergermarket, Thomson Reuters
19.3
16.2
5.2
29
15
0.3
3.3
0.1 0.2 0.61.6%
20.4%
1.9%
0.7%
4.3%
0%
5%
10%
15%
20%
25%
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011
US$billion
M&A Activity in Turkey
Total Deal Value Retail Deal Value
Source: Mergermarket, Dealwatch, Deloitte Data
* Excluding internet retailing transactions.

8. 6
M&A Activity in the Turkish Internet Retailing Sector
Thanks to rapidly growing internet penetration
and an increasing number of online merchants,
the internet retailing sector in Turkey has been
experiencing a boom. In order to benefit from
the high growth potential of the sector, local
and foreign investors are showing great interest
in established internet brands as well as to
promising initiatives being brought to light by local
entrepreneurs.
The Turkish internet retailing sector hosted
a record level of activity with a total of 20
transactions since the first transaction in 2010.
Apparel discount shopping club websites being in
the first place, deal-of-the-day websites and online
apparel retailers attracted most of the attention
during the period.
M&A activity in the Turkish internet retailing sector
reached its historical peak in 2011 with a total of
12 transactions. The first quarter of 2012 which
saw 7 deals also signals a strong trend in terms
of M&A activity. The statistics for M&A activity for
2011-1Q12 period are presented below:
Highlighted Transactions
March 2012 - Markafoni, backed by Naspers,
acquired 75% of Doğuş Holding’s En-moda, an
apparel discount shopping club website which
became operational in June 2011.
December, 2011 - E-commerce giant Amazon
made its first investment in Turkey by acquiring
19% of Çiçeksepeti, Turkey’s leading online flower
and gift retailer.
August, 2011 - USA-based private equity
houses Tiger Global Management and Kleiner
Perkins Caufield & Byers acquired a total of
37% shareholding in Trendyol, leading Turkish
apparel discount shopping club website. Prior to
this transaction, in January 2011, Tiger Global
Management had acquired a 20% stake in the
same company.
May, 2011 - South African multinational media
company Naspers acquired 68% of Markafoni,
one of the pioneer apparel discount shopping club
websites of Turkey for a consideration of US$86
million.
April, 2011 - eBay announced its acquisition of
an 83% shareholding in the Turkish consumer-to-
consumer website Gittigidiyor for US$217 million.
Prior to the transaction, eBay was holding a
minority stake in the company.
Type of Investor Investor Origin Transactions by Business Area

9. 7
Transactions in the Turkish internet
retail sector
# Acquirer Origin Target
1 212 Capital Partners Turkey Butigo.com
2 212 Capital Partners Turkey Balerin.com
3 Etohum Yatırım Turkey Biacayip.com
4 Tiger Global Management USA Sporcum.com
5 Private Investors Turkey e-bebek.com
6 Doğan Online Turkey Evmanya.com
7 Markafoni.com Turkey En-Moda.com
8 Amazon USA Ciceksepeti.com
9 Tiger Global Management USA Trendyol.com
10 iLab Ventures Turkey Unnado.com
11 Bilyoner Interaktif Hizmetleri Turkey
Bombastik.com
(Former Grupca)
12 Hummingbird Ventures Belgium Ciceksepeti.com
13 eBay USA GittiGidiyor.com
14 iLab Ventures Turkey Cimri.com
15 Naspers Netherlands Markafoni.com
16 ePlanet Capital USA Vipdukkan.com
17 Intel Capital USA Grupanya.com
18
Tiger Global Management;
Kleiner Perkins Caufield & Byers
USA Trendyol.com
19 Quants Holding Switzerland Grupfoni.com
20 Tiger Global Management USA Trendyol.com
Source: Deloitte Annual M&A Reviews
2011
1Q12
2010
Area of Business Stake
Deal Value
(US$ million)
Shoe Retailing N/D N/D
Cosmetics Retailing N/D N/D
Lifestyle Products and Gifts N/D N/D
Sportswear Retailing 68.3% N/D
Infant & Baby Products Retailing 50.4% N/D
Furniture and Home Products Retailing 100.0% N/D
Apparel Discount Shopping Club 75.0% N/D
Online Flower and Gift Store 18.7% N/D
Apparel Discount Shopping Club 20.1% N/D
Apparel Discount Shopping Club 33.0% N/D
Deal-of-the-Day Website 30.0% N/D
Online Flower and Gift Store N/D N/D
C2C Online Auction and Shopping 83.0% 217.0
Electronics Retailing 100.0% N/D
Apparel Discount Shopping Club 68.0% 86.0
Apparel Discount Shopping Club 28.2% 5.0
Deal-of-the-Day Website N/D N/D
Apparel Discount Shopping Club 36.7% N/D
Deal-of-the-Day Website N/D N/D
Apparel Discount Shopping Club N/D N/D

10. 8
US$ million
Market Cap
as of
25 May 2012
Enterprise Value
(EV)
EV/Sales EV/EBITDA
Global Apparel Retail
GAP 13,336 13,063 0.9x 6.4x
Hermes 33,861 35,109 9.4x 26.9x
Macy's 15,565 20,526 0.8x 5.8x
Turkish Apparel Retail
Altınyıldız 610 884 2.4x 11.1x
Boyner 152 205 0.5x 6.3x
Vakko 117 150 1.1x 9.7x
Global Food Retail
Carrefour 12,200 28,287 0.3x 10.0x
Metro 9,274 15,023 0.2x 3.8x
Tesco 38,955 53,750 0.5x 6.5x
Wal-Mart 222,098 253,123 0.6x 7.3x
Turkish Food Retail
CarrefourSA 938 958 0.7x 83.6x
Kiler 228 378 0.8x 12.1x
Migros 1,497 2,587 0.8x 11.7x
Tesco Kipa 479 819 0.7x 11.5x
Source: Capital IQ, Public Disclosure Platform
P/E
17.4x
47.2x
12.2x
32.2x
11.7x
27.7x
n/a
11.9x
8.7x
13.0x
n/a
n/a
89.2x
99.8x
Market snapshot

11. 9

12. 10
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