Attila Koksal – Even Deep Investing Experience Cannot Overcome Government Policies

Attila  Koksal is a Board member of Unlu Securities, Turkey’s leading investment house. He began his career in 1985 at the Center for International Financial Research, Inc., in Princeton. Between 1988 and 2001, he held senior positions in Turkey’s leading financial institutions and associations until he became a partner at Dundas Unlu.

He currently serves as a board member of Unlu & Co., Turkey’s leading investment house and holds board positions in a number of Turkish and international institutions. He served six years on the CFA Institute Board of Governors. He also previously served as Presidents Council Representative of CFA Institute EMEA region, and as President of the CFA Istanbul Society.

He holds an MBA from Drexel University and a BSc in Mechanical Engineering from Bogazici University.

In this episode, Attila shares his worst investment ever story venturing in the power generation industry and how government policy interference affected their business.

 “With every investment, you should do your homework. You should really understand the implications of the investment and the possible outcomes.”

- Attila Koksal

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Resources: 

• My Worst Investment Ever Book  
• www.myworstinvestmentever.com

Topics Covered: 

00:54 – Attila Koksal’s professional background as a serial investment banker

03:25 – Sharing his worst investment story venturing in the volatile market of the energy sector

04:15 – Setting up a co-generation plant to aid the power shortage in Turkey

04:44 – Their well-planned business feasibility: electricity to be sold to the grid and the by-product steam to be sold to local industrial companies close to their plant.

06:00 – He shared how they funded the plant: personal saving and bank leverages

07:23 – Factors affecting the energy prices: energy market regulators, an agreement between Russia where they import their natural gas, and government mandates

08:21 – How Turkey’s elections and the government’s populistic moves affected the electricity price

09:07 – The start of the plant losing money: high natural gas costs and they could not sell the steam

09:41 – Having an IRR is 10-12% for project

10:22 – The time they decided to stop operating and the start of selling off the energy production plant’s equipment

11:21 – Having a recoup of around 10% of their initial investment from the equipment that has been sold

13:44 – Factors that affected their revenue line: competition, government incentives for the use of coal for energy production

14:45 – Lessons Attila learned from the experience and the thing they missed that caused the loss

15:50 – The impact of the political intervention to any investment

17:58 – Did his relationship with his partner got affected after the business failed?

19:36 – Andrew’s takeaways from Attila’s story about failing in business

Main Takeaways

• Lesson 1: “I don't think you should invest in an industry or a company which can be subject to political interventions.”- Attila Koksal
• Lesson 2: “With every investment, you should do your homework. You should really understand the implications of the investment and the possible outcomes.” - Attila Koksal
•  Lesson 3: “Failing in business i