Busy scrapping previously agreed infrastructure privatisations in a bid to get higher prices, Turkey's growing confidence has it preparing share sales of two state banks, according to unconfirmed reports, with IPOs of large stakes in Vakifbank and Ziraat Bank under preparation.
Ankara will look to sell the stake in the country's largest state-run lender next year, in what it hopes will be one of the country's biggest stock market listings, unnamed sources told Reuters. The will go ahead in 2014 if international market conditions are favourable, the sources added. Turkey is also expected to seek an SPO in state-run lender Vakifbank in the third quarter of 2013, according to a source with knowledge of the subject.
"It's being planned for 2014 ... The planned initial free float rate will be between 20-25% percent," one of the sources told Reuters. Ziraat's General Manager Huseyin Aydin said earlier in February that the bank was being prepared for a possible IPO although there was no final decision on the timing.
The planned sales of the state banks come as confidence in the Turkish government over the country's attraction for investors appears to be peaking, just as the markets start to pullback from their keen appetite for emerging market assets. Ever since October, when Fitch offered the country its first investment grade rating in close to 20 years, analysts have been reporting an atmosphere of "euphoria" in the market.
That was reflected earlier this week as the government - and more specifically, Prime Minister Recep Tayyip Erdogan - scrapped a $5.7bn deal for a package of roads and bridges with a consortium of local companies with a Malaysian partner. The sale agreed in December was originally welcomed as the assets finally found a suitor with the financing needed at the fourth time of asking. Erdogan however now insists the package should earn at least $7-10bn, and the PM is also mulling the cancellation of a January agreement to sell the Baskent gas grid - again following several failed attempts to offload it.
However, that confidence is the result of the government's success last year in reining in the excesses that accompanied GDP growth of 8.5% in 2011, alongside the global appetite for higher yielding assets. However, both of those trends look about to run out of steam.
Turkish imports have begun spiking again this year, risking the rise of the country's biggest risk - its current account deficit - once more. Meanwhile, the US Fed and European Central Bank have been sending signs that they are to start draining some of the huge volume of liquidity they have put on the markets, which is already seen limiting enthusiasm for EM assets.
Although the Turkish banking sector is one of the most attractive around right now thanks to the economy's rapid development and appetite for credit amongst the population, there's also the worry of swamping the market with banking stock. Officials were forced to reassure investors late last year that they had no plans to sell any more shares in Halkbank in the near future. Following an SPO of a 24% stake in November - Turkey's largest-ever listing at around TRY4.5bn - concern over a potential overhang of shares was growing.