Port Operator's IPO Plan Helps Make Parent No. 1 Turkish Stock

  • Global Yatirim in second attempt to sell stock in unit
  • Successful London deal could drive further gains for parent

The prospect of a London listing for its port unit has sent investors flocking to Global Yatirim, making the stock the best performer among its Turkish peers this year.

Shares in Global Yatirim Holding AS, an industrial group that embraces businesses from energy to tourism, have doubled this year as the stock-sale plan sparks optimism it will unlock value in the parent. Analysts say a further advance is possible, even after the largest gains on the Borsa Istanbul 100 Index, should Global Yatirim succeed in its second attempt at an initial public offering for Global Ports, also known as Global Liman.

“If the IPO goes ahead, we might witness a re-rating at Global Yatirim due to the crystallization of Global Liman’s value,” said Vedat Mizrahi, head of equity research at Istanbul-based Unlu Securities.

The group is selling stock in Global Liman Isletmeleri AS this month, and set the expected price range at 735p to 875p per share ($9.50 to $11.30), suggesting a market capitalization of $595 million to $694 million. Global Ports is the world’s biggest independent cruise-port operator, based on 2015 figures on its parent’s website, with operations from Turkey to Spain and Singapore. That makes it among the most attractive assets owned by Global Yatirim.

Investors optimistic about a Global Ports IPO have been to this point before -- and been disappointed. A share sale that would have valued the unit at as much as $573 million was called off in 2015.

Since then, annual passenger numbers at the ports in which Global Ports has an interest have climbed by 63 percent to 7.8 million, according to an investor presentation on the company website. Compound annual growth for the cruise market is expected to accelerate to 5.4 percent between 2015 and 2022, compared with an average of 4.8 percent in the seven years before that period started, according to the document. For Global Ports, low penetration levels suggests “significant headroom for growth,” it says.

Restrained Valuation

“Because the Global Ports IPO was canceled last time, any upside potential is not fully reflected” in the parent’s stock, said Mehmet Gerz, chief investment officer at Istanbul-based AtaPortfoy. “If and when the IPO takes place, we may see this being priced positively.” Even then, Global Yatirim may trade at a larger-than-usual discount for a company listing one of its units, he said.

Gerz points to a relative lack of market knowledge of Global Yatirim as among the factors driving investor caution. While the ports unit has been a profitable business, the holding company has reported three years of losses and is only followed by one analyst, according to data compiled by Bloomberg. Its negative per-share-earnings growth compares with a positive 1.5 percent median among emerging-market peers.

The test will be whether investors accept the proposed price for Global Ports stock -- the previous IPO failed after the owners deemed the final valuation inadequate.

Based on figures published on the company’s website, the IPO values the cruise-port operating business at around 12 times earnings before interest, taxes, depreciation and amortization. That compares with a multiple of 12.1 times for Marine terminal operator DP World Ltd and 17.6 times for India’s Adani Ports & Special Economic Zone Ltd., according to data compiled by Bloomberg.

Final IPO pricing is expected on or around May 12, with some dealing in the shares starting on the London Stock Exchange the same day.

Global Yatirim, which owns 89 percent of Global Ports, fell for the time in five days on Monday, dropping 1.8 percent to 3.20 liras in Istanbul.

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