• Gas business would offer at least 25% of $240 million capital
  • Turkish companies seen returning to IPO markets on tax change

Torunlar Group, a Turkish company operating in construction, food and energy, is studying selling shares in its natural-gas distribution business in Ankara from the middle of the year, helping it pay back loans used to acquire the unit.

The gas-grid business, Baskent Dogalgaz Dagitim Gayrimenkul Yatirim Ortakligi AS, will “technically be ready for an IPO after June,” Torunlar Chief Financial Officer Ismail Kazanc said in an interview in Istanbul. That coincides with the completion of a three-year audit of the unit, a regulatory requirement before any initial public offering, he said.

The gas-grid operator, which sells the fuel to homes and businesses in Turkey’s capital, was awarded infrastructure investment company status by the markets regulator in February, gaining tax advantages in return for a commitment to hold an IPO within four years, Kazanc said Tuesday.

“This is a profit-making company with a very small annual investment need and a good cash generator,” Kazanc said of the unit. “We plan to do the IPO at the most favorable time based on end-June financials.”

Torunlar is yet to mandate investment banks and lawyers to handle the offering, in which it plans to sell at least 25 percent of Baskent’s 700 million-lira ($240 million) capital. Part of the proceeds will help reduce debt at Torunlar Enerji, the so-called special purpose vehicle that bought Baskent for almost $1.2 billion in a government auction in 2013, Kazanc said.

Turkish companies are returning to the IPO markets after raising just $34 million from listings last year, data compiled by Bloomberg show. Higher borrowing costs after the U.S. Federal Reserve started raising interest rates and a move by Turkey’s Finance Ministry in July to cut taxes on listings are prompting the interest, according to Vahdettin Ertas, head of the country’s capital-markets authority.

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