A Turkish Private Equity Web Log

In an effort to cover the Turkish Private Equity Industry - for the promotion of Entrepreneurship, the private equity asset-investment model, and the communication thereof.

IMKB's Latest IPO's: Sinpaş REIT and Albaraka Turk Bank
The summer has really been heating up concerning IPO's and the IMKB. For both international and domestic investors, the IPO window seems to be fairly open in Turkey. Despite the usual theorizing over accurate values of the offerings, the success of the flotations and the mechanisms behind it may very well prove that Turkey and its ready investment climate is ripe for the taking. Although there is some cause for concern about what this may mean for Turkey's SME's. But first, here's how the two broke down:


Probably one of the most active and exciting sectors in Turkey right now, the Turkish REITs deserve mention all to themselves. Sinpaş REIT, as of its IPO will be the largest REIT, and certainly not the last. Here's how it fell out:

  • 49% of stock was on offer representing 67.12 million shares. The bookbuilding was completed on June 15th.
  • Foreign Investors will take the lion's share 66% of these shares, leaving domestic investors the remaining 34%.
  • Total Subscription was oversubscribed 2x on the international side, while on the domestic side it was 1.08x oversubscribed.
  • Two investors bought more than 5% of the offering, namely, Autonomy Capital and ING Investments.

Sinpaş REIT fell 6 percent on its IPO day, while the index of REITs fell 0.6 percent. The deal was originally priced at 6.85 to 8.40 lira per share. However, the price was eventually opened at YTL 7,60, in the middle of that range, giving the deal a value of 510 million lira ($392 million) and making Sinpas the biggest REIT on the market. Considering the initial public offering price and the share dispersion after the initial public offering, the market value of Sinpaş REIT has now reached to YTL 1.41 billion (approximately $795 million). The company is planning to channel the cash proceeds raised from the IPO into new residential projects. Speculators interviewed by Reuters (Yahoo Finance) were quoted as saying "Sinpas was valued at a 20 percent premium to its net asset value at its IPO price, making it more expensive than the sector, which trades at a discount of 10 percent, on a weighted average." Ayse Colak, deputy general manager of Tera Securities said, "It didn't come out very cheap," , adding the company was a medium-term bet as it has two large projects which are planned but not yet contributing to its value.


Albaraka Turk, a subsidiary of Bahrain-based Albaraka Banking Group, was founded in 1985 as the first bank to operate on non-interest base. Albaraka Türk has 66 branches in Turkey. The bank's reported total assets in the first quarter are YTL 2.6 billion, while its net profit stands at YTL 18.3 million.

  • 22.22% of stock was on offer representing 54.5 million shares. The bookbuilding was completed on June 25th. The bank had its IPO on June 29th.
  • Foreign Investors will take 63% of these shares, leaving domestic investors the remaining 37%.
  • Total Subscription was oversubscribed 21.3x on the international side, while on the domestic side it was 60.4x oversubscribed!!!. This makes total demand for the IPO 32x oversubscribed and at a value of US $5.4 billion.
  • Originally, the price range of the shares, the nominal value of which is YTL 1, was estimated to be between YTL 3.60 and YTL 4.10. Although, now it has priced its initial public offering at 4.1 lira a share, at the top of an initial range, valuing the bank at around $840 million
  • The bank is expecting a total gain between $150 million and $170 million from the IPO.

Shares of Albaraka shot up 10% on opening day, closing at YTL 4.52. The Islamic banking sector is particularly in focus as the owners of larger Islamic lender Turkiye Finans are in talks to sell half the bank, most likely to an institution in the Gulf, which is an Islamic banking hub. The four banks making up the sector saw total assets grow 38 percent last year and net profit rise 56 percent, according to data from the Participation (non-interest) Banks Association. Shares in rival Bank Asya have more than doubled since its offering last year, far outperforming the wider banking sector.

Previously I pondered what this means for Turkey's SME's. Some might say nothing at all - these deals are much too big. Others might simply be happy that the IPO machine is in full gear and being tuned up for more to come. For private equity enthusiasts, this is promising, but for smaller VC's, we still might have to wait awhile. But the domestic demand alone for Albaraka is not something to laugh at, and I'm sure the various legal professionals, underwriters, as well as brokerage houses and investment banks should stand up and take notice. Entrepreneurs also should learn something from this little lesson. Could the IPO window at the IMKB finally be coming of age, able to weather any political and economic storms? Let's wait for the elections first.

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