Pre-IPO investment promotes Istanbul's potential as global financial hub.
The European Bank for Reconstruction and Development (EBRD) and Borsa İstanbul have agreed today to the acquisition by the EBRD of a 10 per cent shareholding in the stock exchange, in the presence of Turkey’s Deputy Prime Minister Mehmet Şimşek.
Borsa İstanbul, majority-owned by the Turkish government, is the sole exchange entity in the country, created in 2013 by combining the Istanbul Stock Exchange, the Istanbul Gold Exchange and the Turkish Derivatives Exchange.
EBRD First Vice President Phil Bennett signed the share purchase agreement alongside Borsa İstanbul’s CEO Tuncay Dinç at the bourse’s headquarters in Istanbul, the country’s financial capital.
The long-term investment demonstrates the EBRD’s confidence in the potential of Borsa İstanbul and the Turkish economy as a whole. It also underscores the Bank’s support for the country’s comprehensive capital market reform programme and the plan to develop Istanbul into a financial centre for the region spanning Central Asia, south-eastern Europe and North Africa.
Turkish Deputy Prime Minister Mehmet Şimşek said: "We are here to celebrate the beginning of the strategic partnership between Borsa İstanbul and the EBRD. I am sure this is going to be a highly beneficial partnership. I would like to thank Borsa İstanbul's management and the EBRD for this great milestone agreement.
"Borsa İstanbul is at the heart of our ambition to make Istanbul an international financial centre. As a founding member of the EBRD, the relations with the Bank are very important to us. Turkey has now become the largest recipient of EBRD finance.This demonstrates the Bank's confidence in Turkey.
"Today's agreement is the expression of this trust. The EBRD has great experience and knowledge in transforming other stick exchanges. This will help the development of Borsa İstanbul."
Borsa İstanbul’s CEO Tuncay Dinç commented: “The region's most advanced exchange and most active international financial institution are cooperating to start an initiative that will shape the financial future of our region.
"The EBRD’s investment in Borsa İstanbul is an important call for international investors, demonstrating that Turkey and Borsa İstanbul are safe destinations for international investments. In the near future we will be working with the EBRD on many projects including investment and technical support for exchanges in the region as well as on Borsa İstanbul’s IPO.”
EBRD First Vice President Phil Bennett said: “We welcome Turkey’s ambition to transform Istanbul into a dynamic hub for internationally significant financial services. With Borsa İstanbul as the catalyst for development of the Turkish capital markets, we believe that our partnership is a logical step towards fulfilling this ambition.
"As a shareholder, the EBRD will work to improve the efficiency and liquidity of Borsa Istanbul and help it become a leading exchange in terms of the number of listed companies and market capitalisation, reflecting the full potential of the Turkish economy.”
The EBRD’s investment comes ahead of Borsa İstanbul’s landmark IPO. The exchange is expected to go public as part of the government’s plan to reshape Turkey’s capital markets. As a shareholder in Borsa Istanbul, the Bank will help with the preparations for a successful listing.
Previously, the EBRD undertook a pre-IPO investment in the Moscow Exchange, invested in the Bucharest Stock Exchange and recently announced its intention to acquire shares in the Zagreb 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 standardisation among the connected bourses. In addition, the EBRD supports the establishment of a regional Central Counterparty across central and eastern Europe to drive the development of capital markets and economic growth in the region.
Deepening local currency and capital markets is a strategic priority for the EBRD generally and in Turkey, in particular. The Bank is investing in bond and equity markets and encourages Turkish companies to tap into capital markets as they seek long-term finance. Most recently, the EBRD has invested in the Turkish lira-denominated bond issued by Intercity, a leading Turkish car leasing company.
The Bank is also working with the authorities on regulations and policies to facilitate further development of the capital markets.
The EBRD started investing in Turkey in 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep.
To date, the Bank has invested €6.8 billion in Turkey through 170 projects in infrastructure, energy, agribusiness, industry and finance. It has also mobilised about €16 billion for these ventures from other sources of financing.
In 2015 the EBRD expects to invest over €1.7 billion in Turkey, its top financing destination.
Borsa İstanbul is advised by Sardis Capital Limited; legal counsels are Göksu Safi Işık, Turunç and Linklaters. Equity Research Desk is the EBRD's financial adviser and the legal adviser is Bezen & Partners.
About Borsa İstanbul
Borsa İstanbul, with historical roots going back to 1873, is a diversified regional exchange in Turkey, providing trading, settlement, custody and registry services for equities, derivatives, fixed income and repo, precious metals and Islamic finance markets.
The Company operates under a single umbrella, following its de-mutualisation and incorporation in 2012, and successful completion of horizontal integration (via the acquisition of the derivatives and gold exchanges), and of vertical integration (via control of the two domestic post trade firms), shortly thereafter.
Through its markets, Borsa İstanbul offers corporates, investors and traders in the region a broad range of financial products suited to their needs, and efficient access to extensive capital markets. Post trade and depository services are offered by its majority-owned subsidiaries of Takasbank (Istanbul Settlement and Custody Bank) and MKK (The Central Securities Depository). Borsa İstanbul calculates 360 indices that measure and benchmark equity and fixed income markets in Turkey.
Borsa İstanbul is a shareholder in the Sarajevo, Baku, Kyrgyz, and Montenegro Stock Exchanges, as well as LCH. Clearnet.