Turkey’s High-Profile IPOs Aren’t Living Up to the Hype

  • Little sign of pent up investor demand, judging by volume
  • IPOs were expensive, companies not well known: Levashova

If there was pent up demand from investors for new Turkish stocks after four years of meager supplies, it isn’t showing.

Average trading volumes for three of the latest Turkish companies to hold initial public offerings -- Global Ports Holding Ltd. and DP Eurasia NV in London and Mavi Jeans in Istanbul -- have slumped to a trickle in the weeks following their market debuts.

“Turkish IPOs were quite high-priced and so they didn’t generate a lot of post-IPO demand,” Anastasia Levashova, a portfolio manager at Blackfriars Asset Management in London, said in emailed comments. The European summer holiday lull and the fact that potential investors had “little knowledge about these companies” may have been further factors behind the unenthusiastic trading, she said.

Trading in Global Ports, a cruise-ports operator controlled by Istanbul-based Global Yatirim Holding AS, has averaged 4.5 percent of the volume recorded on its May 15 debut in subsequent sessions, according to data compiled by Bloomberg. DP Eurasia, which operates Domino’s Pizza restaurants in Turkey, Russia, Azerbaijan and Georgia, has seen a similar pattern since its June 28 London listing. The same goes for Mavi Jeans, which started trading in Istanbul on June 15.

“People bought known stocks at a discount and had no need to chase new, large IPOs with an unknown track record,” Levashova said.

Volumes ‘Normal’

Companies in emerging markets have stepped up IPOs this year to benefit from increased international investor appetite for riskier assets. Firms in eastern Europe have raised $2.5 billion so far in 2017, twice as much as a year earlier. Turkish companies are also testing the waters with share sales, after almost three years of political instability discouraged international investors.

A lack of trading volume for a new stock is “normal,” Borsa Istanbul Executive Vice President Korkmaz Ergun said in an interview on Wednesday. “Its investors are mostly foreigners and they don’t engage in trading immediately. As they enter the game in time, shares in circulation will rise, too.”

The IPOs by Global Ports, DP Eurasia and Mavi earned their owners a combined $673 million -- 97 percent of the amount raised in Turkish initial share sales this year, which is the highest total for the country since 2011, according to data compiled by Bloomberg. EON SE unit Enerjisa Enerji, Memorial Health Group, Tab Gida, the largest Burger King franchise holder outside the U.S., and Baskent Gaz are among companies said to be considering share sales in London or Istanbul, according to people familiar with the plans.

Another signal of tepid interest in the new listings is a dearth of analyst coverage: none follow DP Eurasia or Mavi Jeans, according to Bloomberg data. Global Ports has three -- Shore Capital, Goldman Sachs Inc. and Barclays. Goldman Sachs and Barclays were global coordinators for the Global Ports IPO. Mavi and Global Ports traded below their IPO prices as of Wednesday. DP Eurasia has gained 1.2 percent.

‘Quiet Period’

“According to related regulations, there is a quiet period of 40 days for equity research analysts following the initial public offering,” Selim Kender, chief strategy officer and head of investor relations at DP Eurasia, said in an emailed statement. “During this period, analysts can’t issue research reports. For us, this period ends Aug. 7, when research reports on DP Eurasia from our advisers Morgan Stanley and Citigroup are planned to be published.”

In the case of Mavi, beyond those investors invited to buy the stock, “there is not a significant conviction about the company yet,” said Gulsen Ayaz, head of institutional sales and trading at Deniz Invest in Istanbul. “And in order for that conviction to shape up, and perhaps awareness about the stock to increase, some analyst coverage and a proven track record is needed,” she said.

Mavi fell 0.9 percent to 41.74 liras in Istanbul by 2:37 p.m. In London, DP Eurasia dropped 2.9 percent and Global Ports rose 0.2 percent.

— With assistance by Fercan Yalinkilic, and Taylan Bilgic

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