Abu Dhabi is set to buy a stake in a key Turkish port, according to four sources aware of the deal, in a further sign of a rapprochement between the two countries.
Under the potential agreement, state-controlled group AD Ports Group would invest in an entity to be established by the Türkiye Wealth Fund (TWF) to run the Aegean coast port of Izmir, said two of the sources. The sources requested anonymity to discuss details of the deal that has yet to be finalized.
The size of the stake was not immediately clear but one of the sources said the deal could be valued at about $500 million. The port, owned by Türkiye's sovereign wealth fund, is an important gateway that needs new investment.
An official for the Türkiye Wealth Fund declined to comment. AD Ports didn't immediately respond to a request for comment while ADQ, the emirate's sovereign wealth fund and majority owner of the ports group, wasn't available for comment.
The planned transaction comes as Türkiye's government seeks foreign investment to accelerate its shift to more conventional policymaking after the May elections after a yearslong easing cycle.
The country's central bank has delivered aggressive monetary tightening to cool demand and curb double-digit inflation.
Ports play a key role in the strategic shift in global manufacturing. Weaknesses in supply chains exposed by the COVID-19 pandemic and heightened geopolitical tensions are spurring a shake-up as companies seek to bring production closer to the point of sales.
Meanwhile, Türkiye hopes that the aggressive rate-hiking cycle launched in June will lure foreign investors, including foreign direct investment (FDI). Some Western investors are starting to tip-toe back into markets.
President Recep Tayyip Erdoğan met with President Sheikh Mohamed bin Zayed Al Nahyan (MBZ) on the sidelines of the COP28 U.N. climate summit held in Dubai earlier this month.
ADQ is chaired by National Security Adviser Sheikh Tahnoun bin Zayed Al Nahyan, a brother of Sheikh Mohamed.
Since 2021, when Ankara launched a diplomatic effort to repair ties with Saudi Arabia and the UAE, investments and funding from the Gulf helped boost Türkiye’s foreign reserves and stabilize the Turkish lira.
Ankara has secured some $28 billion in foreign currency swap deals in recent years, including from the UAE.
UAE officials have said they see huge investment opportunities in Türkiye, including in energy and logistics. The Dubai state-owned port operating giant DP World bought a majority stake in a Turkish port earlier this year.
Last year, Abu Dhabi’s International Holding Co. acquired, via a subsidiary, a 50% stake in Türkiye’s Kalyon Enerji for $490 million.
The UAE and Türkiye signed a free trade agreement in May that was meant to make investment easier. The two countries agreed on a series of deals worth more than $50 billion as part of Erdoğan's visit in July.