Borsa Istanbul to go public in bid to jumpstart equity market

ISTANBUL - Reuters

Borsa Istanbul, Turkey’s only stock exchange, plans to list up to 43 percent of its capital through the sale of most of the shares held by the national Treasury. DHA Photo.

Turkey’s stock exchange Borsa Istanbul said yesterday it plans to go public, in Ankara’s latest move to bolster its $220 billion equity market that has punched below its weight for years.

Borsa Istanbul, the country’s only stock exchange, plans to list up to 43 percent of its capital through the sale of most of the shares now held by the national Treasury.

Turkey has joined the list of the world’s top 20 economies, thanks to years of solid growth, but its equity market has not kept up, with the bulk of trade centered around a handful of large-cap stocks.
Prime Minister  Ahmet Davutoğlu said in January he wanted Istanbul to break into the ranks of the world’s top ten financial hubs, an ambitious target given the challenge from other emerging market rivals such as Dubai.

At $220 billion, Turkey’s stock market is world’s 29th largest, lagging behind some emerging market rivals. The Johannesburg market is worth more than four times that, even though South Africa’s economy is less than half the size of Turkey’s.

“There is a mismatch between the complexity and size of the Turkish economy and the size of its capital markets,” consultancy Oliver Wyman said in a 2014 report, which also said Turkey’s equity market could easily double in size.

The bourse, which has previously said it planned to privatize, did not say how it would spend the proceeds from the capital raising.

But it could look to bolster its technology as other exchanges around the world have been doing, to help it to compete for business from hedge funds and high-frequency traders.

The public offering is expected to be completed by the end of this year, with a possible extension through 2016, it said.

The Treasury owns 49 percent of the exchange, with 36.6 owned by the bourse itself.