Turkish IPO faces key test in Pegasus sale
Dubai, April 23, 2013
By Una Galani
Turkish IPOs could ride in the slipstream of Pegasus Airlines. The long-awaited initial public offering of the fast-growing low-cost carrier is the largest the country's lumpy new-issues market has seen for two years.
Success could encourage more large firms to list and help the government fulfill its ambition of turning Istanbul into a top global financial centre within the next decade.
Pegasus' listing of around one third of its shares is notable partly for its sheer size. The $360 million offering priced in the middle of its range, valuing the entire firm at $1 billion. That makes it the market's biggest flotation since real-estate firms Emlak Konut and Koza Altin went public in 2010, according to Thomson Reuters.
The valuation is pretty punchy too - at 14.9 times its trailing earnings, the multiple is in line with the European peer-group average but a hefty premium to national carrier Turkish Airlines , according to one broker.
What's more, Pegasus may signal the start of a more steady migration of family-owned businesses to public ownership. The vendor is the Sabanci family's food-to-health investment firm Esas Holding, which also owns 12 per cent of Air Berlin. Unlocking the wealth within Turkey's powerful family conglomerates is central to institutionalising the market.
Turkey wants to more than double the number of stock-exchange listings to 1,000 by 2023. The potential is clear. The market value of stocks listed on Borsa Istanbul as a percentage of GDP is around half the level of India and two thirds of Germany.
A new capital markets law passed at the end of last year brings the process of selling shares closer in line with the European Union and should improve disclosure, making Turkish companies better IPO candidates, says PricewaterhouseCoopers.
For now, the equity capital markets pipeline is dominated by secondary offerings from the government, possibly including Turk Telecom and Vakifbank. A smooth ride for Pegasus could at the very least encourage Ankara to finally sell off its remaining 49 per cent stake in Turkish Airlines.
At best, it could prompt Turkey's other business dynasties to introduce some new big names to the market.-Reuters