Taking Risks

What are Armacon’s core strengths?

When we registered the company we set out to invest in numerous sectors—mainly energy, real estate, construction, and food and beverages in Turkey and neighboring countries. Traditionally, companies have a specialty in a single industry, but our plan is to actively engage and invest in different sectors and establish the Armacon brand.

What is behind the diversification strategy?

We’re willing to take risks—Turkish companies historically do. I have a background in banking and movie production, and now I’m doing this. Our company needs to have that philosophy. More and more companies are acting like holdings and diversifying. The current economic climate means that you can’t rely on one sector, and at the rate that technology is moving it’s beneficial to be as flexible as possible. We started this company from the ground up and we’re going to shape it. Our partner, Mustafa Alpaslan, has a background in the services industry—mainly cleaning and security for municipalities, public and private companies, and institutions all across Turkey. We started our first infrastructure project in the oil and gas sector immediately after we registered in the fall of 2011. While we had expected to start our first project in Turkey, the opportunity rose to begin in a neighboring country. This project is showing a healthy return on investment by providing natural gas to people who don’t have access, and it has lots of potential to expand. We personally experienced one more time what a strategically important geographical location Turkey has.

What opportunities are you following in the renewable energy sector?

We are enthusiastic about the renewable energy sector in Turkey—especially solar. Unfortunately, the latest government legislation didn’t meet our expectations for feed-in tariffs. We were hoping for them to be at the same level as European country standards. Turkey has an extraordinary amount of potential for solar energy—the capacity and insolation levels are higher than in most countries in Europe. It’s comparable to Spain. Since the tariffs weren’t as high as we expected, we have looked into other ways of taking advantage of government incentives. If you use photovoltaic (PV) systems that are produced in Turkey, then there are additional feed-in tariffs. Now we’re doing some more research and hope to partner with companies, especially from the US, Germany, Italy, and China, that have more know-how to start producing panels here in Turkey. If we can produce our own panels, we can take advantage of higher tariffs. Globally, there is a huge supply of solar panels at the moment so very few companies want to make additional investments to produce more. But we believe that if we start installing our own panels in Turkey, we can take advantage of the reliability of Turkish products in the region and achieve good returns. We are trying to find ways to take this risk. The government is promoting the production of high-tech industry, and we are more than willing to pursue this route. Many of the bigger companies are shying away from investing in solar—hydro and wind is more attractive for them because it offers a faster and more secure return. We think it’s important for Turkish companies like ours to break through first and be pathfinders for the whole solar industry in Turkey. That’s why we want to develop the technology here.

What capacity are you aiming to produce?

If we establish a factory here in Turkey, we want to produce the newest technology in the market with panels that have maximum efficiency and performance. This is the latest and most drastic advance, so there wouldn’t be a need to update the technology immediately. More power per panel means fewer panels and lower costs. We’re envisioning a factory that has a capacity of around 65 MW to start with. We’re evaluating a number of sites around the country, and the government is announcing new and different incentives constantly.

What are your targets for the medium term?

We have ongoing investments in Turkey’s real estate market. The market is full of opportunities, and we always keep our eyes open. We have invested in plots of land in both Ankara and Istanbul for future development. Multi-purpose projects are currently extremely popular in Turkey, and we want to ensure that we evaluate the positives and negatives as the market matures. Our goal is to be ahead of the curve of the next wave of real estate opportunities in Turkey.