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May 2010 | ifr special report | 3 EQUITY CAPITAL MARKETS


Equity pipeline or pipedream?


Turkey’s IPO market has never lived up to its potential. Official moves to get more companies listed and instill an equity culture face many difficulties. But bankers are confident that a new crop of IPO candidates could bring the market to life, despite the problems facing equity markets around the world. Nick Lordreports.


“Going public and trading on the ISE is essential for the companies to have continued access to the funds they need for growth and for ensuring sustainability. Numerous Turkish companies fail to make sufficient use of such opportunities because they are not traded on the ISE.”


O


n May 6 and 7, over 2000 corporate executives, brokers, auditors and other assorted service providers met to discuss why so few


Turkish companies sought a public listing. The IPO Turkey Campaign – Istanbul Summit, organised by the Istanbul Stock exchange, had three aims: to find suitable candidates for listing, to address the hurdles they faced in going public and to emphasise that having a deep public equity market was a crucial component of national economic growth.


Speaking at the event, Huseyin Erkan, chairman and CEO of the ISE was explicit: “Going public and trading on the ISE is essential for the companies to have continued access to the funds they


need for growth and for ensuring sustainability,” he said. “Numerous Turkish companies fail to make sufficient use of such opportunities because they are not traded on the ISE. I am sure that prominent Turkish companies will become global companies if they have sufficient access to the opportunities offered by the capital markets.” That Turkey lacks an equity culture is self evident. The size of the listed equity market is small, making up just 37% of GDP, compared to over 90% for most developed markets. Moreover, the biggest companies in the country are the family owned conglomerates such as Koc Holdings and Sabanci Holdings. Of the 30 stocks that make up the main ISE Index, 15 are family companies.


Non-residents’ equity holdings, weekly market value US$m


70,000 60,000 50,000 40,000 30,000 20,000 10,000


2007 Source: Central Bank of the Republic of Turkey 2008 2009 2010


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