IPO boom in Turkey shows no signs of slowing, 100 companies await approval

The IPO frenzy in Turkey shows no signs of abating, with approximately 100 companies awaiting approval to go public next year. Capital Markets Board (SPK) Chairman İbrahim Ömer Gönül told Bloomberg that the expected increase will follow a busy year in which about 50 companies were expected to enter Borsa Istanbul by the end of 2023.

However, Gönül warned that it is important to manage the pace of IPO approvals to ensure the market can absorb new shares. He does not expect 100 IPOs to take place next year and instead believes that about 50 listings will be approved per year for the foreseeable future. "It may not always be a good idea to complete IPOs very quickly. It is important to look at the state of the market, the economic climate, and whether there will be sufficient demand to complete the listings," Gönül said.

The IPO boom in Turkey has made the country one of the largest IPO hubs in Europe, the Middle East, and Africa this year. 49 companies have completed the IPO process so far this year, raising approximately 66 billion lira based on this year's average exchange rate. This figure surpasses all previous years in records dating back to 2010 on the Capital Markets Board's website, both in US dollar terms and in local currency.

IPO INDEX GAINED 98 PERCENT IN VALUE

This surge is partly driven by the stock market boom in the country, as inflation of around 60 percent has led ordinary citizens to invest in stocks to compensate for the erosion in the value of their savings. Investing in newly issued IPO shares has become particularly popular. More than 75 percent of shares that went public for the first time in 2023 rose by about 60 percent in their first five trading days. While Turkey's main stock market has risen 45 percent year-to-date, the Borsa Istanbul IPO Index, an indicator of companies that have gone public in the last two years, has gained 98 percent in value.

NUMBER OF INVESTORS EXCEEDS 8 MILLION

Since 2020, when local investors began flocking to the stock market, the IPO index has increased by more than 4,400 percent. According to data from the Central Securities Depository, the number of stock market investors reached 8.2 million as of November 19, nearly triple the 3.3 million level of the previous year. However, Gönül urged investors to be cautious, advising them to seek professional investment advice.

"THE STOCK MARKET SHOULD NOT BE TREATED LIKE A GAME"

"It is important that demand for stocks is increasing, but we do not want these investors to enter the stock market as if they are playing a game. Many investors target only newly issued IPO stocks, thinking they will always make huge returns, but consistent gains can never be guaranteed," Gönül stated. He noted an increase in complaints to regulatory bodies from new investors whose stocks have lost value, with many demanding government guarantees to recover their losses. "If you are looking for a government-guaranteed investment product, then you should go and buy bonds," Gönül added.