Turkey Wealth Fund to Retry Bond Sale

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Turkey’s sovereign wealth fund will retry a Eurobond issuance next year after its debut was shelved two months ago due to weak investor demand, and is also considering selling shares in some of its assets.

The institution is weighing an initial public offering of stock-exchange operator Borsa Istanbul AS within the next two years, Chief Executive Officer Zafer Sonmez said in an interview with BloombergHT TV. The fund on Monday sold a 10% stake in the bourse to Qatar Investment Authority for $200 million.

The fund wants to become a regular issuer in international debt markets with Eurobond sales every “18 to 24 months,” he said. While it is slightly more expensive for wealth funds to borrow internationally compared with sovereign debt sales, the fund can also rely on dividends from the companies it owns and proceeds from asset sales to fund its operations.

The fund, set up in 2016 to invest in new businesses and back state-owned firms, wants to help further stoke growth in an economy that outpaced peers in the third quarter. Sonmez sees the fund contributing toward an entrepreneurial state, a term borrowed from economist Mariana Mazzucato, who argues that governments are often the force behind transformative innovation.

The fund also plans IPOs for state-owned pipeline operator Botas, oil and gas producer Turkiye Petrolleri AO, and a holding company for mines, Sonmez said, declining to give a time frame.

It is also seeking investments in the insurance industry outside of Turkey either through acquisitions or expanding existing businesses, he said. The fund is receiving strong interest from strategic companies in the planned sale of its operational rights in horse racing, he said.

Capital Injection

The fund took a majority stake in Turkcell Iletisim Hizmetler AS, the country’s biggest mobile phone operator, earlier this year, helping to resolve an almost two-decade long shareholder dispute. It also merged state-owned insurance companies and injected cash into three state lenders to boost their lending power.

The fund’s portfolio -- which also includes TC Ziraat Bankasi AS, Turkiye Halk Bankasi AS and Turkish Airlines -- had assets of $245 billion at the end of 2019, Sonmez said. The fund’s total equity stood at $33 billion, while profit amounted to as much as 9 billion liras ($1.15 billion).

Sonmez declined to comment on whether the fund will inject capital into the country’s flag-carrier as Turkish Airlines struggles amid the coronavirus pandemic.

The airline, while stacking up record losses this year, has performed “far better” than its peers in term of managing the difficult business environment, Sonmez said.

©2020 Bloomberg L.P.

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