Turkish companies considering initial share offerings to mop up funds

Istanbul: Turkish companies are again considering initial public offerings (IPO) as a means to raise funds as debt financing becomes more expensive after the United States Federal Reserve started raising interest rates, according to the head of the country’s capital markets authority.
Many companies have held preliminary talks with the Ankara-based regulator about plans to go public in 2016, Vahdettin Ertas, head of the agency known as SPK, said late last month in an interview in Istanbul. Higher borrowing costs and a move by the Finance Ministry in July to cut taxation on IPOs are prompting the interest, he said.
An increase in IPOs would follow a dismal year in 2015, as investors shied away from the country’s assets because of political uncertainty. Five companies sold shares through an IPO last year, having a combined offer size of just 36 million liras ($12 million). That compares to 299 million liras-worth of deals a year earlier, according to data. At least nine companies have expressed plans for this year. The ruling Ak Party won a majority in November 1 elections, ending a political deadlock in the country.
“Several companies have come to us, which is a good sign,” Ertas said. “In the new era starting with Fed hikes, available liquidity will be more expensive for companies to obtain because interest rates will be higher in international markets.”
Turkish companies from a range of industries are considering share sales. Vatan Bilgisayar, Turkey’s second-biggest electronics retailer, is choosing advisers for a share sale in May, while state-run satellite operator Turksat Uydu Haberlesme is also planning an IPO in 2016, chief executive Ensar Gul said on December 8.
Borsa Istanbul, the country’s equity exchange, has similar intentions, while soccer club Fenerbahce Futbol plans an IPO of its 82.5 per cent stake in jersey and sports products retailer Fenerium.
Power and gas company STFA Yatirim Holding, electronic goods distributor Penta Teknoloji, ready-to-wear retailer DeFacto Perakende, E.ON’s Turkey joint venture Enerjisa are among companies that have expressed plans for IPO in 2016 or 2017. Carrefoursa, a grocery joint venture between Haci Omer Sabanci Holding and Carrefour of France, plans a so-called secondary share offering in 2016, a person with knowledge of the matter said on December 15.
“There’s no excuse for companies not to go public any longer,” said Ilhami Koc, chairman of Is Yatirim Menkul Degerler, Turkey’s biggest brokerage and also head of the country’s capital markets association, an umbrella body for brokerages. “Although pricing of assets in Turkey is still low for the sellers, companies have no regulatory excuse now.”