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.

Is Turkey's IPO Window Open on the Istanbul Stock Exchange (IMKB)? Here are the 2007 IPOs!
2007 has been a very busy year, indeed. In the first half of the year, there were 8 IPO's (including Albaraka Turk Bank) totaling $2.820 billion. This breaks a record set in 2000, when 36 companies went public for close to the same amount. Here is a breakdown of the last 8 years of IPOs on the Istanbul Stock Exchange (IMKB). Remember, there was a crisis at the beginning of 2001.

IMKB IPOs (2000-2007)
$2,809 mln
$56.5 mln
$11.3 mln
$600 mln
$1,740 mln
$930 mln
2007 (as of November)
3,313 mln

To follow, here is a list of the 2007 IPOs that have occured on the IMKB.

IMKB IPOs (As of November 2007)
Feb. 15-16 TAV Airports Holding $335 mln
Feb. 22-23 Sağlam REIT $5.59 mln
April 25-26-27 Oyak Yatırım Ortaklığı A.Ş.
(Oyak Investment Fund)
$8.31 mln
April 16-17-18 Merkez Securities INC. B Type Investment Trust $2.43 mln
May 2-3-4 Halkbank $1,837 mln
May 10-11 İş Investment Services $74.2 mln
June 14-15 Sinpaş REIT $384 mln
June 20-21-22 Albaraka Turk Bank $173 mln
Nov. 19-20 Tekfen Holding $493 mln

This information has been sourced directly from the IMKB website. In addition, Elif Batu Yener from Referens/TDN posts some of this information and ends with an interesting quote from Attila Köksal, director general of Dundas Ünlü Securities, "The sway of foreigners in the market has changed the face of IPOs. Small volume companies are not of interest anymore. An IPO of $20-30 million is harder than one of $100 million. Because it does not attract foreigners."

My question is this: What does this mean for Private Equity or VC's in Turkey?

Occasionally I've referenced Josh Lerner's Venture Capital Cycle and this situation is no different. According to Black and Gilson (1998):
"The health of the VC market depends on the existance of a vibrant public market that allows new firms to issue shares. Only with such a public market can VC's make a credible committment to entrepreneurs that they will ultimately relinquish control of the firms in which they invest."
From previous research, we also know that if there is an increase in the number of IPO's there should also follow an increase in investments as well as funds being raised. In other words (thus empirically proven) VCs and PE professionals assert that the "IPO window is open" and continue upon their work to take firms public (or rush firms to public offerings (grandstanding)), and/or raise more funds. We have seen an increase in fund raising. We could also say that in this positive environment of excess liquidity (raised funds and investments), more IPOs could also follow. This also brings up a good question: What does a bubble look like on the IMKB?

To add to that, we know that the elections are over, and the IMKB 100 has been breaking records and rocketing to heights never seen before. Two weeks ago, speculators were wondering if IMKB 100 could break 52K. Upon closing of the election, it had reached 55K, but as of this posting, the IMKB 100 now stands at 51,424.

In addition, large companies such as KVK, Digiturk (expected to raise $200-$300 mln in the 4th quarter) and Ülker Chocolate are in line to launch IPOs. We will just have to wait and see how these fall out. As to Mr. Köksal's comment, it is a shame for seed and venture investors that the companies being floated and the exit opportunities on the IMKB are a bit on the larger side and therefore somwhat reliant on buyout funds and foreign investors. By looking at the entities being floated, two are real estate investment trusts, a sector that has seen some rapid growth as of late. We also see an investment trust and financial services, not to mention the privatization of Halkbank by taking some shares public.

We must admit that the IMKB does not specialize in technology IPOs, nor is the IMKB's IPO success a resemblence to NASDAQs bubble of the late 90's and the inflated valuations that came with it. However, in its own respect, the IMKB has come of age and we can say that the IPO window is open, albeit for the more traditionalist (bricks and mortar) company. This post will be updated over the course of the year as more IPOs are floated.

Is it me, or does the IMKB's website (Turkish) just wreak of the Pre-Web 1.0 bubble and post-70's bureaucrats? Remember the days of using Prodigy or AOL and jumping off Yahoo! to see the IMKB website on your 14.4 dialup modem? That's what it feels like. Take a look at the NASDAQ or the London AIM for comparison. For a stock exchange website to not even have a ticker of symbols and quotes just seems...strange. No Flash, no CSS, not even javascript! Come on, IMKB - get with the 21st century - you are supposed to be in the business of floating and listing companies, marketing to potential IPOs and investors that you have a modern reliable trading infrastructure. Animated .GIFs just don't cut it anymore.

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Posted @ 12:36  
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