TURKEY: Sabanci plans share sell-offs

09 December 1994

Leading corporate Haci Omer Sabanci Holding, is planning a series of share offerings of its subsidiaries, according to market sources. This follows the sell-out of the initial public offering (IPO) in its insurance subsidiary Aksigorta on 24 November (MEED 2:11:94, Stock Market Watch).

Bossa, the largest textile factory in Turkey is next on offer. With an estimated market value of $230 million, the IPO size will be around $34 million. Roadshows in early December will introduce the company to investors in Europe, the US and Hong Kong. The offering is being arranged by Istanbul's Global Securities and the UK's Kleinwort Benson. Other subsidiaries for sale are textile firm, Sasa, and possibly Dusa, a joint venture with the US' Dupont.

The IPOs should change the group, which is owned by the Sabanci family and headed by Sakip Sabanci, into a more institutional entity. Several of the group's subsidiaries are already traded on the Istanbul exchange, including Akbank, tyre maker Brisa, and cement producer Ak Cimento. The proceeds will also help fund acquisitions, especially from the government's privatisation programme. The company is interested in several of the proposed $4,000 million-5,000 million draft privatisation schedule for 1995 planned by the government following the introduction of a fundamental privatisation law (see Cover Story).

Tax incentives are another reason behind the IPOs - Aksigorta, for example, will now benefit corporate tax exemptions granted to companies going public. Sabanci may also be making a move before the possible introduction of capital gains tax in 1995.

The Aksigorta sale was a success, being three times oversubscribed in the local tranche and arousing much international interest. However, about 90 per cent of the offering valued at $23 million was sold abroad, notably through a private placement in the US. It was marketed through roadshows in European and US cities.

Institutional investors responded for the most part, although two large European insurance companies also took a keen interest. Due to limited time and size the shares are only quoted on the Istanbul bourse and are not listed abroad.

Three times oversubscribed, the domestic offering was for 7.5 million of a total 75 million shares floated worldwide, representing 15 per cent of the company's total TL 5 million million ($138 million) capital. A further 25 million may be issued on the stock exchange if there is demand when trading in the shares starts on 5 December. This would take the IPO closer to 20 per cent of total equity.

The IPO was arranged by Global Securities and Paribas Capital Markets. To attract domestic investors, Aksigorta came out at a discount to the market multiple.

Recently, there has been a flurry of other IPOs on the stock exchange. Offerings have been rarely more than 15 per cent of total equity. Among the recent IPOs have been tomato paste producer Tukas, brewery supplier Anadolu Malt, and two other insurance companies, Gunes Sigorta and Halk Sigorta.

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