| UPDATED: Islamic Bank Turkiye Finans Bought Out by Saudi National Commercial Bank; Deal with CBK and the Noor Group falls through |
| 10 July 2007 |
UPDATED: 19-7-2007
Saudi National Commercial Bank agrees to purchase 60% of Turkiye Finans for $1.08 billion, valuing the company at $1.8 billion. Boydak Holding and the Ülker Group will retain 20% each from the deal. The deal will be completed by the end of the year and could be revised up $120-130 million depending on profits. This post was originally written on the premise that CBK and the Noor Group were going to be purchasing 50% of Turkiye Finans, but it looks as though that deal was passed up for Saudi NCB.
Paul Wouters, a guest contributor on Dinarstandard.com, wrote a very nice piece on the Turkish Islamic Banking Sector (or Participation Banks as they call it). It comes on the heals of my last post about the IPO of Albaraka Turk Bank. It details nicely the success and potential success of the players in that space.
Indeed, the Islamic Banking sector (wiki), which does not charge interest under Sharia Law, has been a small but active sector. Orgininally, according to local newspapers, and as printed in Iş Banks Daily Market Review (July 3rd, 2007(pdf)), Turkiye Finans is to sell a 50% stake to the Commercial Bank of Kuwait (CBK) and Noor Group. UPDATE: This deal is now defunct. The deal is said to be around $1.8 billion for Turkey's 2nd largest Islamic bank (based on assets), and should be completed by the end of the month. This has come just a year and a half after the Ülker Group sold 50% of Family Finans to the Boydak Holding and Anadolu Finans, thus creating Turkiye Finans. Once the merger has been completed, I will update the post on banking acquisitions in Turkey.
Of the four Islamic banks in Turkey, two are now listed on the Istanbul Stock Exchange (IMKB) with Kuwait Turk Bank thinking about an IPO in 2008-2009. Bank Asya, was the first and one of the most successful IPOs to date and has also been one of the most profitable companies listed on the IMKB. Judging by the size of the domestic demand for Albaraka Turk, it doesn't seem like this sector is going to cool down anytime soon.
 Technorati Tags: IMKB, Family Finans, Turkiye Finans, Mergers, Deal Flow, Turkey, Commercial Bank of Kuwait, Albaraka Turk, Banking Sector, Islamic Banking, The Noor Group, Boydak Holding, Ülker Group, Bank Asya, Saudi NCB
Labels: Banking Sector, IMKB, IPO, Islamic Banking, Mergers
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| IMKB's Latest IPO's: Sinpaş REIT and Albaraka Turk Bank |
| 02 July 2007 |
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:
SINPAŞ REAL ESTATE INVESTMENT TRUST
 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 BANK
 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.
A FINAL WORD
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.
Technorati Tags: IMKB, IPO, REIT, Sinpaş, Deal Flow, Turkey, flotation, Albaraka Turk, Banking Sector, Islamic Banking
Labels: Banking, Banking Sector, Flotations, IMKB, IPO, Islamic Banking, REIT
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Publisher: Jon H. Black
