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May 2010 | ifr special report | 5 EQUITY CAPITAL MARKETS

Turkish IPO pipeline Company

33% of the company at a price of TL36.80 per 100 shares. The deal was lead by Goldman Sachs and JPMorgan for the in- ternational tranche and Akbank and Isbank for the domestic tranche. The deal did have some trouble getting

away, coming as it did during a period of market turbulence. It priced at the bottom of the range of TLK36.80-TL46. The shares opened at TL33.25 and then ended the first day’s trading at TL34.75. The company itself is a gold mining concession that is owned by the Ipek family. The equity story sought to capture both the historical preference that domestic investors have for gold with the rise in the present day price of the metal. It also emphasised how investors are looking for alternative ways to play gold without buying the physical commodity.

Since Koza Gold listed, the market is closely watching the travails of two large companies that are seeking to list: Aksa Energy and Akfen Holding. Aksa Enerji is one of the largest independent power producers in Turkey and is part of the Kazanci Holding conglomerate. It plans to sell 13.5% of the company (15.5% with Greenshoe) in a deal that will bring in TL619m, if it prices at the top of the range of TL4.9-TL7.2 per share. Bookbuilding for the deal closes on May 14 and 70% of the transaction is allocated to foreign investors. Aksa is watching with some trepidation as the global downturn in the IPO market has reached Turkey’s shores. In particular the experience of Akfen Holdings, a construction company, will cause some consternation. It tried to sell 29% of the company through an IPO that could have raised up to US$700m. However it tried to build its book during the week of May 1-8, when the Greek contagion fears were at their height. A number of European IPOs either had to be shelved or needed price or size cuts to get them finished. On Monday May 10, Akfen announced that it was cutting the size of its IPO to just 7% of the company’s share capital and that it would be priced at the bottom of its TLK12.5 to TL17.5 price range. The lesson is that while the big picture for the IPO market looks rosy, short term market turbulence plays havoc with the IPO process. “The fact is that the macro

Mango Gıda Sanayi ve Ticaret BIS Enerji Elektrik Üretim Aksa Enerji Üretim Akfen Holding Ihlas Gazetecilik

Çema Döküm Sanayi

Idealist Real Estate Investment Fund Euro Yatırım Menkul Degerler Gedik Yatırım Menkul Degerler

Anel Elektrik Proje Taahhüt ve Ticaret Source: Istanbul Stock Exchange

Sector Food

Energy Energy

Conglomerate Media

Heavy manufacturing Real Estate

Financial services Financial services Energy

“The fact is that the macro picture in Turkey is quite constructive for IPOs from the region, but issuance obviously to some extent remains hostage to the overall markets. Deals in play always need to navigate what is going on in the wider market.”

Paid in capital (US$m) 4.29


430.30 86.45 52.00 15.11 6.50

13.00 23.40 29.90

IPO ratio (%) 34.00 34.50 16.92 29.20 33.00 35.48 25.00 25.00 25.00 34.33

Another potentially large deal that is used to dealing with turbulence of a different sort is Pegasus Airlines. This is a private sector airline that operates out of Istanbul’s second airport, flying to domestic holiday destinations within Turkey and to major European markets such as Germany and the UK. The company has appointed Credit Suisse and Is Yatirim to undertake its IPO in the second half of 2010. It has yet to formally apply for a listing on the ISE.

New companies

picture in Turkey is quite constructive for IPOs from the region, but issuance obviously to some extent remains hostage to the overall markets,” said Nick Williams head of EMEA ECM at Credit Suisse in London. “Deals in play always need to navigate what is going on in the wider market.”

Turkey's pension system Total amount No. of

4/1/2010 2/1/2009 7/1/2008 8/1/2007 2/1/2006 Source: EMG

contracts 2,207,126 1,935,824 1,583,117 1,149,413 715,766

No. of

participants 1,990,623 1,747,086 1,464,008 1,079,289 675,864

of contributions (TLbn) 7.10 5.47 3.95 2.62 0.94

Total invested amount (TLbn) 6.89

5.29 3.82 2.54 0.20

Total amount of

participant's funds (TLbn)

9.12 6.40 4.59 2.85 1.10

What these new listings all show is that there has been a subtle shift in the types of companies that are listing. On the energy side, companies such as Aksa Energy have been set up to take advantage of the government’s energy privatisation plans. This process will take four to five years and will see the government sell off all of Turkey’s generation and distribution assets. In the past, the government would have been content to maybe just list the companies themselves. While this is on the cards for the generation assets (see Privatisation article page 10), it is likely that it will undertake a blended process where it sells some assets directly to the private sector while also potentially listing companies as well.

For the private sector to buy the assets, a range of financing options are needed,

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