Our open letter to the Board of Directors of Akfen Holding (IST: AKFEN): "A Renewed Plan to Optimize Shareholder Value" https://wsd.li/akfen

1. Letter to the Board of Directors of
Akfen Holding
February 16, 2015

2. February 16, 2015
Board of Directors
Akfen Holding A.Ş.
Koza Sokak No: 22
Ankara 06700, Turkey
Dear Members of the Board,
WSD Capital Management, L.P. (collectively, “WSD”) is an institutional investor
with an attributable economic interest in shares of Akfen Holding A.Ş. (“Akfen”
or the “Company”). We are publishing this letter now, following the Annual
Shareholders’ Meeting, so as to initiate a transparent debate about Akfen’s
renewed plan to optimize shareholder value going forward. While we applaud the
announced TL 200 million share buyback authorization, we believe strongly that,
by itself, this move is not enough to improve shareholder value.
By way of background, WSD is a value-oriented investment management firm
that seeks to invest in companies and special situations with a compelling cata-
lyst to enhance value for the benefit of all shareholders. Our approach to such
investments is to actively engage with management teams and boards of direc-
tors in a constructive manner to execute on opportunities to unlock shareholder
value through a combination of strategic redirection, improved operational execu-
tion and more disciplined capital allocation.
We have conducted an extensive amount of research on Akfen and the industries
in which it operates. Based on our team’s experience assisting companies in
designing and executing strategic corporate initiatives and enhancing capital
allocation and efficiency, we believe that Akfen is deeply undervalued, both in
absolute terms and in relation to its peers, and that a number of opportunities
exist to create significant value for shareholders based on actions within the
control of management and the Board of Directors of the Company (the “Board”).
Akfen is one of the largest industrial conglomerates in Turkey with over 37,000
employees1 and more than TL 1.1 billion in gross revenues.2 The Company cur-
rently operates in the field of infrastructure investment, project management,
development, operation, and construction, both in Turkey and abroad.
This is a durable, high-quality business that operates in growing markets. Akfen
provides a critical service and has an established track record for investments for
which the competition is low or in which the income stream is determined with a
minimum guarantee. In addition to the income derived from its subsidiaries, the
Company generates significant income out of the divestiture of its infrastructure

3. Page | 2
investments, their public offering, and new projects issued by means of strategic
and financial corporate initiatives.
Akfen has a strong value proposition that drives long-term economic growth: it is
able to generate efficiencies in the construction and management of its projects
while avoiding competition in congested and stagnant markets. The increased
demand for new infrastructure projects and favorable demographics should result
in stable concessions with monopolistic market structures and sustainable cash
flows through long-term minimum income guarantees.
Despite its favorable business characteristics and the compelling growth pro-
spects for its industry, Akfen currently trades at a deep discount to its intrinsic
value. Over the past 1-, 3- and 4-year periods, Akfen has underperformed both its
peer group and the broader stock market.
Akfen Historical Share Price Performance:*
1 Year 3 Year 4 Year**
BIST Stock Index (XUTUM) 16% 35% (1%)
Proxy Peer Index (XHOLD) 13% 45% 8%
Akfen Holding A.Ş. (AKFEN) 1% (38%) (55%)
Underperformance vs. BIST Stock Index (14%) (73%) (54%)
Underperformance vs. Proxy Peer Index (12%) (84%) (62%
Source: WSD, Borsa Istanbul
* Annual performance as of December 31, 2014 (USD-based relative returns; not adjusted for dividends)
** As of date of IPO, May 2010 through December 31, 2014
It is our belief that the deficit in the Company’s share price performance has been
driven above all by a combination of lackadaisical execution and supine capital
allocation. Furthermore, we respectfully disagree with Akfen management’s
current assertion that there is nothing left to do to improve the Company’s share
price performance.3 In order to assiduously unlock Akfen’s latent value, we
believe that management should take dedicated action, as outlined in more detail
below, to strengthen execution, improve capital allocation, and explore all availa-
ble alternatives to maximize shareholder value.
We estimate that pursuing this plan of action could more than double Akfen’s
share price. Improvements should be easily achievable over the next year and
could result in an estimated share price of TL 10.62 – TL 11.68.4

4. Page | 3
Strengthen Execution
We believe a persistent conglomerate discount limits total shareholder returns
(TSR) over time. In Akfen’s case, things are complicated further because it is
neither a pure-play growth company, nor a cyclical recovery play nor a capital
return story. More importantly, it fails to deliver low EPS volatility and strong
EPS growth, the fundamental rationale for a conglomerate.
Akfen – Peer Group Comparison:*
AKFEN ENKAI TKFEN
Asset Turnover 0.02 0.50 0.64
Cash Conversion Cycle 1,247 days 42 days 23 days
Return on Assets 0.5% 6.2% 5.1%
EPS Volatility (5-Year Avg.) 444.1% 12.5% 99.4%
Source: WSD, Company Filings
* Calculated from most recent available data.
Moreover, Akfen has underperformed its peers in terms of efficiency across a
number of key operational metrics that undermine the Company’s long-standing
economic potential. It is our belief that fortifying managerial focus on execution
will be of primary concern to stress-test Akfen’s resolve to bring its efficiency in
line with both its historic averages and its industry peers.
In light of this historical fact pattern, we believe there is a meaningful and credi-
ble opportunity to regain the growth legacy of the Company through a “back-to-
basics” approach that is rooted in operational and financial performance.
Improve Capital Allocation
Given Akfen’s extensively undervalued shares, we urge the Company to take
advantage of its excess liquidity by accelerating it’s repurchase program to net a
high return on capital.
This is not intended to criticize the overall trajectory of the current three-year
share repurchase program. In fact, it represents a strong belief in Akfen’s future
as well as its ability to commit to delivering value by using a balanced approach
of investing in its business, maintaining a flexible financial position, and return-
ing capital to shareholders.

5. Page | 4
Leading Turkish equity research analysts agree and share our outlook on Akfen’s
exceptional upside potential and share buyback program, targeting an average
share price increase of ~20%.5
Explore Alternatives to Maximize Shareholder Value
Akfen’s unique portfolio of assets offers many opportunities for financial corpo-
rate initiatives that would result in a lower NAV discount attached to the mar-
ket’s rating of the Company’s shares. That is to say, these initiatives would
prompt the market to more fully value the Company's existing assets.
Mersin International Port (“MIP”) is one of the top container ports in the world, a
trade gateway to 190 countries with coveted access to multimodal connections, a
monopolistic port corridor connection to the Mersin Free Zone, and the largest
domestic port with the capacity to provide all port services in the same port area.
By our analysis, MIP today comprises a major percentage of Akfen’s enterprise
value, contributing over 40% of the Company’s EBITDA. While MIP is a top
performer within Akfen, its true value appears to be ignored by the market.
Mersin International Port Financial Overview:
2013 2014 (9M)
Operating Revenue $275 million $218 million
EBITDA (Adjusted) $163 million $133 million
EBITDA Margin (Adjusted) 59.3% 61.0%
Net Debt $474 million $377 million
Container Handling Volume (TEU) 1.38 million 1.12 million
Source: Company Filings
We believe this underperformance would be remedied by listing a minority stake
of MIP and injecting meaningful liquidity into Akfen. We are of the firm belief
that investors would be attracted to MIP’s growth potential and favorable busi-
ness characteristics. To give a glimpse of the hidden value attainable, at a modest
valuation of 6x EBITDA, an initial public offering would contribute an incremen-
tal $519 million in market valuation for the Company’s 50% ownership share in
MIP or approximately TL 4.86 per Akfen share.6
Like many conglomerates, Akfen has a portfolio of strong businesses facing
different challenges side by side, each obscuring the other’s true worth. The

6. Page | 5
Board must weigh the potential upside from the available corporate initiatives
against the execution risk associated with all other strategic alternatives.
This is a rather advantageous period for Akfen and we believe that now is the
time to decisively pursue the initiatives outlined herein while recognizing that
the opportunities created by today’s healthy market conditions may not be avail-
able in the future. As Akfen’s most industrious investor, we have a vested inter-
est in seeing the Company take advantage of all available opportunities to create
sound value for the benefit of all shareholders.
We have outlined a far-reaching plan to improve the value of the Company and
we look forward to discussing all of these points in more detail. We believe our
proposal to strengthen Akfen serves all of its stakeholders – employees, manage-
ment, and fellow owners.
Yours sincerely,
Ertan Enginalev
Managing Partner
WSD Capital Management
1 Total number of employees working for companies subject to joint management as of Sept. 2014.
2 Consolidated revenue from 2013 operations including the share of revenue from JV subsidiaries.
3 Sümeyye Dalkılınç, “Yabancı Yatırımcı Büyüme Görmeli”, Anadolu Ajansı. January 18, 2015.
4 Valuation range assumes Akfen is able to prompt market to re-rate its shares through an
accelerated share repurchase program and public listing of a minority stake in MIP.
5 Price targets: Ak Yatırım (TL 6.38); İş Yatırım (TL 6.80); Garanti Yatırım (TL 6.40).
6 In USD terms, $1.98 per Akfen share converted at the current rate of exchange (TL 2.4581).

7. DISCLOSURE STATEMENT AND DISCLAIMERS
This presentation is for general informational purposes only, is not complete and does not constitute an agreement,
offer, a solicitation of an offer, or any advice or recommendation to enter into or conclude any transaction or
confirmation thereof (whether on the terms shown herein or otherwise). This presentation should not be construed
as legal, tax, investment, financial or other advice. The views expressed in this presentation represent the opinions
of WSD Capital Management, L.P. (“WSD”) and the funds it manages, and are based on publicly available
information with respect to the Company that is the subject of this presentation (the “Issuer”) and the other
companies referred to herein. WSD recognizes that there may be confidential information in the possession of the
companies discussed in this presentation that could lead such companies to disagree with WSD’s conclusions.
Certain financial information and data used herein have been derived or obtained from filings made with
regulatory authorities and from other third party reports. Funds managed by WSD currently own, and/or have a
combined beneficial and economic interest in, shares of the Issuer.
WSD has not sought or obtained consent from any third party to use any statements or information indicated
herein. Any such statements or information should not be viewed as indicating the support of such third party for
the views expressed herein. WSD does not endorse third-party estimates or research which are used in this
presentation solely for illustrative purposes. No warranty is made that data or information, whether derived or
obtained from filings made with any regulatory agency or from any third party, are accurate. Past performance is
not an indication of future results.
Neither WSD nor any of its affiliates shall be responsible or have any liability for any misinformation contained in
any third party regulatory filing or third party report. Unless otherwise indicated, the figures presented in this
presentation, including any internal rates of return (“IRRs”), return on invested capital (“ROIC”) and investment
values have not been calculated using generally accepted accounting principles (“GAAP”) and have not been
audited by independent accountants. Such figures may vary from GAAP accounting in material respects and there
can be no assurance that the unrealized values reflected in this presentation will be realized. There is no assurance
or guarantee with respect to the prices at which any securities of the Issuer will trade, and such securities may not
trade at prices that may be implied herein. The estimates, projections, pro forma information and potential impact
of the opportunities identified by WSD herein are based on assumptions that WSD believes to be reasonable as of
the date of this presentation, but there can be no assurance or guarantee that actual results or performance of the
Issuer will not differ, and such differences may be material. This presentation does not recommend the purchase or
sale of any security.
WSD reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. WSD
disclaims any obligation to update the data, information or opinions contained in this presentation.
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements. All statements contained in this presentation that are not
clearly historical in nature or that necessarily depend on future events are forward-looking, and the words
“anticipate,” “believe,” “expect,” “potential,” “opportunity,” “estimate,” “plan,” and similar expressions are generally
intended to identify forward-looking statements. The projected results and statements contained in this
presentation that are not historical facts are based on current expectations, speak only as of the date of this
presentation and involve risks, uncertainties and other factors that may cause actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied
by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to,
among other things, future economic, competitive and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond the control of WSD.
Although WSD believes that the assumptions underlying the projected results or forward-looking statements are
reasonable as of the date of this presentation, any of the assumptions could be inaccurate and, therefore, there can
be no assurance that the projected results or forward-looking statements included in this presentation will prove to
be accurate. In light of the significant uncertainties inherent in the projected results and forward-looking
statements included in this presentation, the inclusion of such information should not be regarded as a
representation as to future results or that the objectives and strategic initiatives expressed or implied by such
projected results and forward-looking statements will be achieved.
WSD will not undertake and specifically declines any obligation to disclose the results of any revisions that may be
made to any projected results or forward-looking statements in this presentation to reflect events or circumstances
after the date of such projected results or forward-looking statements or to reflect the occurrence of anticipated or
unanticipated events.

8. NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
Under no circumstances is this presentation intended to be, nor should it be construed as, an offer to sell or a
solicitation of an offer to buy any security. Funds managed by WSD are in the business of trading -- buying and
selling -- securities. It is possible that there will be developments in the future that cause one or more of such funds
from time to time to sell all or a portion of their holdings of the Issuer in open market transactions or otherwise
(including via short sales), buy additional shares (in open market or privately negotiated transactions or
otherwise), or trade in options, puts, calls or other derivative instruments relating to such shares. Consequently,
WSD’s beneficial ownership of shares of, and/or economic interest in, the Issuer’s common stock may vary over time
depending on various factors, with or without regard to WSD’s views of the Issuer’s business, prospects or
valuation (including the market price of the Issuer’s common stock), including without limitation, other investment
opportunities available to WSD, concentration of positions in the portfolios managed by WSD, conditions in the
securities markets and general economic and industry conditions. WSD also reserves the right to change its
intentions with respect to its investments in the Issuer and take any actions with respect to investments in the
Issuer as it may deem appropriate.
CONCERNING INTELLECTUAL PROPERTY
All registered or unregistered service marks, trademarks and trade names referred to in this presentation are the
property of their respective owners, and WSD’s use herein does not imply an affiliation with, or endorsement by,
the owners of these service marks, trademarks and trade names.