Istanbul bourse head says talks underway with Saudi IDB to sell stake

ISTANBUL

The Saudi-based Islamic Development Bank (IDB) is in talks with Turkey’s main stock exchange Borsa Istanbul to buy a stake, the bourse’s chairman told Reuters on April 19, adding that they wanted to complete the negotiations by the end of the year. 

Speaking to Reuters on the sidelines of a news conference, Himmet Karadağ also said that once the talks with IDB are completed Borsa Istanbul will concentrate on the initial public offering process. 

“The Islamic Development Bank wants to buy a stake in Borsa Istanbul. We are in talks with them. We want to complete the negotiations by year-end and then to concentrate on our IPO process,” Karadağ said. 

Earlier a senior IDB official had told Reuters that the bank plans to take at least a 10 percent stake in Turkey’s state-run stock exchange, as the multilateral lender ramps up activities in the country. 

The IDB expects to finalize negotiations with Borsa Istanbul in two to three months as part of wider efforts to develop Islamic finance in Turkey, said Abdulhakim Elwaer, the IDB’s director of cooperation and resource mobilization, as quoted by the news agency early on April 19. 

Equity investments are rare for the AAA-rated IDB, which focuses primarily on extending trade financing and grants across its 57 member countries, but Turkey is seen as a key market to expand the reach of Islamic finance.

“The larger picture is IDB’s cooperation with Turkey, this is only one engagement. We want to help develop Turkey as a global Islamic financial center,” Elwaer said late on April 18.

The IDB and Borsa Istanbul signed a cooperation agreement last November, with discussions currently ongoing to decide on a specific size and time frame for the stake, he added.

The bourse has a share capital of 423 million lira ($115.6 million), implying a value of 42.3 million lira for a 10 percent stake.

The exchange is majority-owned by the Turkish government via its sovereign wealth fund, but also includes a 10 percent stake from the European Bank for Reconstruction and Development and a 7 percent stake from NASDAQ.

Borsa was created in 2013 after the merger of the Istanbul Stock Exchange, Gold Exchange and Derivatives Exchange, ahead of plans for an IPO.