Page 48 - FintechAtlas2019

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Turkey
Accelerated investments with growing interest from foreign investors
The fintech sector in Turkey has been growing for a decade thanks to the digital transformation of certain sectors, coupled with rising interest from local and international investors.
The Turkish fintech ecosystem saw an increase in initiatives and investments, especially after 2017, that led to a rapid acceleration in activity in the first nine months of 2019. Last year as a whole, the fintech market saw three private equity exits and fintechs represented 13% of total startup investment in the country.
After a decade in which systems providers grew in scale, the past two years have seen the emergence of new fintech fields, particularly cryptocurrency platforms (40+ investments in 2019). Payment systems companies, led by well-established local players, are also gaining momentum, reporting annual growth of around 20%, which is mainly attributed to the digital transformation of the aviation, tourism and food & beverages industries. Banking sector players are also benefitting from
this growing ecosystem and have invested in the integration of fintech ventures into their banking operations. Turkey’s fintech regulatory structure has also been improved due to the legislative amendment (No. 6493, effective from January
2020) that mandated the Central Bank of the Republic of Turkey (CBRT) as the sole regulator, replacing the dual structure involving the CBRT and the Banking Regulation and Supervision Agency (BRSA). Thanks to this new regulatory structure, the digital transformation of the Turkish fintech sector is expected
to intensify as the banking and electronic payment systems continue to integrate and offer further opportunities for new fintech initiatives.
The landmark transaction of 2019 was PayU’s acquisition of Iyzico, the leading payment systems provider. Having grown its transaction volume between 2016 and 2018 at a monthly rate of 11.2% to a total of 500 million Turkish lira, Iyzico was purchased on the basis of the highest valuation in Turkey’s fintech sector (an enterprise value of 146 million euros). Elsewhere, Sovos, a global tax software provider, acquired Foriba, a leading player in e-invoicing and VAT reporting, for an undisclosed amount while Paraşüt, a cloud-based provider of e-invoicing services, which had recently obtained funding of over 7.5 million euros, was acquired by Mikro and Zirve, two Turkish software companies backed by Turkven and venture capital firms. The main driver of such transactions is the buyers’ desire to build scale and consolidate their position.
Hagia Sophia in Istanbul, Turkey