Baku, Azerbaijan, May 29
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The European Bank for Reconstruction and Development (EBRD) is entering exclusive negotiations to acquire a 10 percent stake in Borsa İstanbul, in a landmark deal which will support Turkey's efforts to reshape its capital markets, the message from EBRD said May 29.
Borsa İstanbul, majority-owned by the Turkish government, is the sole exchange entity in Turkey, 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 May 29 with Borsa İstanbul Chairman Talat Ulussever and Borsa İstanbul CEO Tuncay Dinc, paving the way for a pre-IPO investment in the stock exchange.
Expected to take place in 2016, 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, south-eastern Europe and North Africa.
EBRD First Vice President Phil Bennett said: "Borsa İstanbul is at the heart of Turkey's ambition to become a financial centre for the wider region. As a shareholder in Borsa İstanbul we will support its efforts to become a leading stock exchange in terms of the number of listed companies and market capitalisation, reflecting Turkey's economic potential."
Noel Edison, Director for Insurance and Financial Services at the EBRD, added: "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."
Borsa İstanbul's CEO Tuncay Dinç said: "As a founding member of the EBRD, Turkey will benefit from the Bank's direct investment in Borsa İstanbul. This long-term pre-IPO investment is yet another indication of the great potential of Turkish capital markets and Borsa İstanbul. We consider this strategic partnership to be another important milestone on the road to making İstanbul an international financial hub."
Previously, the EBRD undertook 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 standardisation among the connected bourses.
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 has invested in YDA İnşaat's first Turkish lira-denominated bond listed on Borsa İstanbul. 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.
In just six years the Bank has invested over €5 billion in Turkey through more than 140 projects in infrastructure, energy, agribusiness, industry and finance. It has also mobilised over €12 billion for these ventures from other sources of financing.
In 2014 Turkey became the leading recipient country of the EBRD, with new investments worth €1.4 billion.
The EBRD, owned by 64 countries and two intergovernmental institutions, is supporting the development of market economies and democracies. Follow us on the web, Facebook and Twitter.
Borsa İstanbul, with historical roots going back to 1873, is the sole provider in Turkey of trading, settlement, custody and registry services for a wide range of products such as equities, debt securities, repo, sukuk, warrants, options, futures, certificates, and exchange traded funds (ETFs).
The company operates under a single umbrella, following its de-mutualisation and incorporation in 2012, and after 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 Stock Exchanges of Sarajevo, Baku, Kyrgyz Republic, and Montenegro.