Biggest IPO in Three Years No Remedy to Turkey Sale Drought

  • Global Tower seeks to raise $124 million, plans expansion
  • Unlu’s Mizrahi sees no immediate end to dearth of IPOs

The biggest initial public offering in three years in Turkey may not be enough to break a hiatus in share sales because of political uncertainty and risk aversion toward emerging markets.

Global Tower, a mobile-phone tower operator formally known as Kule Hizmet ve Isletmecilik AS, plans to raise as much as 385 million liras ($124 million) for a market value of 1.5 billion liras, making it the largest deal since low-cost airline Pegasus Hava Tasimaciligi AS issued stock in 2013, according to data compiled by Bloomberg.

The company, owned by Turkey’s largest wireless company, Turkcell Iletisim Hizmetleri AS, plans to expand regionally and will consider making acquisitions once the IPO is completed, Chief Executive Officer Nihat Narin said by phone on Tuesday. It will offer as many as 86.3 million shares, or 25 percent of its stock, which will include an over-allotment option of 11.3 million shares at 3.82 liras to 4.46 liras apiece to local and international investors this week.

With almost no debt, rising profit and very little competition, Global Tower has guaranteed long-term contracts with customers which make the company an attractive defensive bet, rather than the IPO being an act of “bravery,” according to Vedat Mizrahi, managing director of research at Unlu & Co. in Istanbul. “I expect this dearth in IPOs to continue for some time, given the political and economic uncertainty in Turkey and rising risk-aversion in global markets.”

Companies including port operator Global Liman Isletmeleri, Turkish Aerospace Industries Inc. and Borsa Istanbul have either canceled or postponed IPOs as a series of presidential and general elections in 2014 and 2015 as well as an upsurge in terror attacks that culminated in a failed coup in July deterred investors and weighed on economic growth.

Turkcell shares rose as much as 1.1 percent to 9.91 liras on Borsa Istanbul on Tuesday, the most in a week.

Investor Roadshow

Global Tower, whose management is marketing the securities in an international roadshow, is targeting Oct. 20 and Oct. 21 for book-building and Oct. 27 as the first day of trading, Narin said. The share sale is being managed by Citigroup Inc. and Istanbul-based brokerage Is Investment.

“The company’s strategy is to continue to grow through organic expansion as well as focusing on selective and disciplined inorganic growth,” Narin said. It plans to pay out at least 75 percent of its distributable net income as dividends, while keeping to its “disciplined indebtedness policy,” the CEO said.

Full-year profit rose to 44.3 million liras in 2015 from 30.8 million liras a year earlier, the company said in a public filing on Friday. Global Towers runs more than 9,000 towers in Turkey, Belarus and Ukraine, making it the fifth-biggest tower operator according to TowerXchange.

Global Towers “may be seen as a low-risk, good-reward investment,” Mizrahi said. For the other companies that held off on IPOS, “cheap valuations is a turn-off for them; so they choose to hold off,” he said.

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