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12 | ifr special report | May 2010 PRIVATISATION


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Privitisation implementations at signature stage Approval date 22/11/2007


TCDD Izmir Port TCDD Derince Port TCDD Bandırma Port TEKEL Real Estate


TEKEL Izmir Real Estate TEKEL Istanbul Real Estate TEKEL 5 Real Estate


TEKEL Ankara Real Estate TEKEL Izmir Real Estate


TEKEL Izmir Konak Real Estate TEKEL Real Estate


TEKEL Camaltı Salt Mine TEKEL Ayvalık Salt Mine TEKEL Real Estate TEKEL Real Estate Total


3/7/2007


19/9/2008 30/1/2009 30/4/2009 14/7/2009 25/12/2009 5/2/2010 5/2/2010 5/2/2010 22/2/2010 24/3/2010 24/3/2010 24/3/2010 30/3/2010


Source: Republic of Turkey Prime Ministry Privatization Administration


Sales (US$)


1,275,000,000 195,250,000 75,500,000 689,172


8,704,119


198,350,893 559,390


20,416,497 25,044,236 5,097,319 985,238


76,605,382 5,995,204 5,921,395 8,678,787


2,002,797,632


What all these deals point to is a huge supply of product coming onto the market that needs to be financed locally. This will create a virtuous circle where both the supply of good


The shining beacon of the privatisation process is Igdas, the gas distribution company serving Istanbul. The company is also a candidate for an IPO followed by a block sale to a trade buyer.


The other shining beacon of the privatisation process is Igdas, the gas distribution company serving Istanbul. This deal is being undertaken by Citi, EFG and AK Securities. The company is also a candidate for an IPO followed by a block sale to a trade buyer. With a price tag of over US$4bn this would be a large deal at any time. But during these capital constrained times it is doubly so. Thus a multi stage process which involves a strategic investor plus domestic and in- ternational offerings would make the most sense. But such a complex undertaking would take time and as such no one is really expecting this to come to market until at least early 2011.


The government has just started the process for selling its transport assets, in particular the toll roads, and bridges. Bankers say the assets are worth between US$3bn and $4bn at current comparable valuations. The sale is being handled by local firm TSKB. Also for sale is IDO, the iconic ferry company that criss-crosses the Golden Horn, the Bosporus and the Sea of Marmara. Advisers for this deal are expected soon. Also in the transport sector, ports that are for sale include the re-tendering of Izmir Port which was originally sold in 2007 for US$1.25nbn but then failed to complete when the bidders could not raise the finance due to the financial crisis. The privatisation authority is now the owner again and is likely to sell it in 2011.


One other deal that failed due to the crisis was the sale of a ten year concession to run the national lottery. The PA put a floor price of US$1.6bn on the deal but the concession terms were harsh, with limits on advertising and prize draws that would have been hard to sell in a bull market. These terms are understood to be revised and the deal could come soon. While not an IPO candidate per se, it is definitely a candidate for some local currency debt and any deal is likely to be financed in this market.


What all these deals point to is a huge supply of product coming onto the market that needs to be financed locally.


investments is matched by a liberalisation of the local capital markets, resulting in rapidly improving markets, companies and returns.


This will create a virtuous circle where both the supply of good investments is matched by a liberalisation of the local capital markets, resulting in rapidly improving markets, companies and returns.


However in order to get there, the government will need to be mindful of market conditions. There is a feeling among some that it is trying to do too much, especially at a time of global market tension and heighted political worries within Turkey. The PA recognises this and is providing financing for the deals that go through, by allowing the winning bidders to pay in instalments. These are typically structured over a three year period where 25% is paid in the first year, 50% in the second and 25% in the third. Finance is provided at Libor +4% to offset the lack of foreign banks providing more than a one-year bridge. This should allow the deals to get done even if the local markets are not ready to provide the long term debt and equity finance they deserve.


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