EBRD and Borsa Istanbul in exclusive talks over stake sale

ISTANBUL

The European Bank for Reconstruction and Development (EBRD) is entering exclusive negotiations to acquire a 10 percent stake in Borsa Istanbul, in a landmark deal which will support Turkey’s efforts to reshape its capital markets, the EBRD has said in a statement.

Borsa Istanbul, majority-owned by the Turkish government, became the sole exchange entity in Turkey after it was created in 2013 by combining the Istanbul Stock Exchange, the Istanbul Gold Exchange and the Turkish Derivatives Exchange.

EBRD First Vice President Phil Bennett and EBRD Director for Insurance and Financial Services Noel Edison signed a term sheet in Istanbul on May 29 with Borsa Istanbul Chairman Talat Ulussever and Borsa Istanbul CEO Tuncay Dinç, paving the way for a pre-IPO investment in the stock exchange.

Expected to take place next year, the IPO is part of the government’s comprehensive plan to reshape Turkey’s capital markets and turn the country into a financial hub for the region spanning Central Asia, southeastern Europe and North Africa.

“Borsa Istanbul is at the heart of Turkey’s ambition to become a financial center for the wider region. As a shareholder in Borsa Istanbul, we will support its efforts to become a leading stock exchange in terms of the number of listed companies and market capitalization, reflecting Turkey’s economic potential,” Bennett said.

“This investment is part of the EBRD’s long-term strategy in Turkey to help the country deepen its capital markets. We will work to improve the efficiency and liquidity of the bourse to make it more attractive to domestic companies and foreign investors and will also help with the preparations for a successful public listing,” Edison added.

‘Great potential’

Previously, the EBRD had undertaken a pre-IPO investment in the Moscow Exchange and invested in the Bucharest Stock Exchange. The bank is also supporting SEE Link, an order-routing system established by the Bulgarian, FYR Macedonian and Zagreb stock exchanges and aimed at increasing liquidity and advancing standardization among the connected bourses.

“As a founding member of the EBRD, Turkey will benefit from the bank’s direct investment in Borsa Istanbul. This long-term pre-IPO investment is yet another indication of the great potential of Turkish capital markets and Borsa Istanbul. We consider this strategic partnership to be another important milestone on the road to making Istanbul an international financial hub,” said Dinç.

Deepening local currency and capital markets in the countries where it invests is a strategic priority for the EBRD. The bank pursues this goal through investment, advice and support for reforms.

Most recently in Turkey, the bank invested in YDA İnşaat’s first Turkish Lira-denominated bond listed on Borsa Istanbul. It also works with the authorities on regulations and policies to further improve the functioning of capital markets.

The EBRD started investing in Turkey in 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep.