Turkey’s sovereign wealth fund has gained control of the country’s biggest mobile phone operator, Turkcell, in its largest acquisition since its controversial creation in 2016, raising anticipation of more takeovers down the road. Other major companies that have hit bad straits amid Turkey’s economic turmoil, made worse by the coronavirus pandemic, are likely to end up under the roof of the fund, which has the status of an incorporated company whose board is headed by President Recep Tayyip Erdogan, with Treasury and Finance Minister Berat Albayrak — Erdogan’s son-in-law — being the deputy chairman.

Unlike other sovereign wealth funds, owned typically by oil-rich countries with budget surpluses, the Turkey Wealth Fund (TWF) has emerged as a sort of “parallel budget” for debt-ridden Ankara, operating with little accountability. While the main purpose of genuine wealth funds is to secure profitable investments for accumulated capital, the TWF has sought to secure funds through borrowing. Likewise, the fund’s Turkcell move, announced June 18, entails further borrowing atop a treasury-guaranteed loan of 1 billion euros that the fund secured from foreign lenders last year.

Ever since its inception, the wealthless wealth fund has vacillated on what role it should play, standing out with company rescues in recent times. 

The latest deal extricates Turkcell from a long-standing deadlock stemming from a feud between its shareholders. The TWF entered the deal via the public Ziraat Bank, which is among its assets. The bank was already a stakeholder in Turkcell and a loan creditor to another shareholder, Cukurova Holding. The fund bought the shares of Sweden’s Telia as well as shares from Cukurova and then sold some of those shares to the company of a Russian tycoon. As a result of those intricate transactions, the TWF became the controlling partner of Turkcell, holding 26.2% of its shares, including a 15% privileged stake.