Recent development

In an effort to provide financing for infrastructure, diversify the financial instruments, and increase the depth of capital markets, Turkey introduced the Law on the Establishment of Turkish Sovereign Wealth Fund (the “Law”) on August 26, 2016. The Law establishes the Turkish Sovereign Wealth Fund (Türkiye Varlık Fonu / “Sovereign Fund”) and the Turkish Sovereign Wealth Fund Management Joint Stock Company (Türkiye Varlık Fonu Yönetimi Anonim Şirketi / “Management Company”), its asset management company.

What the Law says

  • The Management Company was established to manage the Sovereign Fund. The Management Company has a TRY50 million share capital (approximately USD17 million) and all of its shares will be owned by the Turkish Privatization Administration. The Management Company is a private law entity, a model previously applied by Ziraat Bankası and Halk Bankası.
  • The Sovereign Fund and the Management Company is organized under the Prime Minister’s Office, and not subject to rigorous rules applicable to governmental entities.
  • The Management Company is authorized to engage in all securities trading, such as shares, debt securities, derivatives and Islamic finance securities, money market transactions, real estate transactions, and to find and arrange project finance in both national and international markets.
  • The Management Company’s directors and general manager are appointed by the Prime Minister.
  • The Management Company is authorized to engage in cross-border partnerships with other countries and companies.
  • The Sovereign Fund will be financed by privatization profits, the budget surplus of other governmental entities and additional funding provided from the capital and money markets.
  • Analysts speculate that one of the Sovereign Fund’s biggest resources will be the unemployment fund and government contributions to the private pension system. Turkey has established an auto-enrollment private pension system beginning from January 1, 2017.
  • The Management Company’s own assets and the assets under its management that are transferred from the Sovereign Fund will be segregated.
  • The assets of the Sovereign Fund can only be pledged, mortgaged or otherwise encumbered for financing arrangements. Other than the security interests on assets that are established under financing arrangements, the Sovereign Fund’s assets cannot be (i) pledged or otherwise disposed, (ii) attached or subject to injunctions, and (iii) included in the bankruptcy estate in the event of bankruptcy.
  • The Sovereign Fund, the Management Company, and any other affiliates of these entities will be exempt from various taxes and fees, such as corporate tax, stamp tax, municipal taxes, real estate tax, resource utilization support fund, banking and insurance transaction tax, capital markets fees, and court and enforcement fees.
  • The Sovereign Fund, the Management Company, and any other affiliates of these entities will be audited by a panel of three experts appointed by the Prime Minister. The Council of Ministers will review the findings of the expert audit and the Parliament will discuss the report annually.
  • The Sovereign Fund, the Management Company, and any other affiliates of these entities must comply with the corporate governance principles applicable to public companies.


The Turkish Government aims to create a sovereign fund financed by its excess and idle funds, utilizing the excess funds for infrastructure investments. These investments include mega-projects (e.g., Eurasia Tunnel, İzmir-Istanbul Highway), airports, toll roads, railroads, bridges, ports and other infrastructure investments. The Sovereign Fund is expected to create its own resources in the future; however, as of now it will either use the excess public funds or seek financing abroad.


Muhsin Keskin leads the Istanbul office’s Banking and Finance and Capital Markets Practices. Muhsin also advises clients on various aspects of mergers and acquisitions including private equity investments.