Turkey’s Bebeto Candy Is a Hit in the Stock Market

(Bloomberg) -- The Turkish maker of Bebeto candy rose on its first day of trading in Istanbul on Friday after adding the world’s largest sovereign wealth fund as its top investor in the run-up to the initial public offering.

The IPO of Kervan Gida Sanayi ve Ticaret AS is the largest on the nation’s stock exchange in more than two years, with the company earmarking some of the proceeds for deals, the repayment of debt and the expansion of existing operations.

Norway’s $1.2 trillion sovereign wealth fund was the biggest single buyer of stock sold during a bookbuilding exercise last week, snapping up 7.7% of the shares offered, according to a public filing. The fund is among nine international institutional investors that bought 19% of the shares sold at 9 liras apiece, lead book-runner Oyak Yatirim Menkul Degerler AS said.

The stock rose 10% to 9.9 liras as trading started, giving Kervan Gida a market value of 1.86 billion liras ($237 million).

Considering that demand surpassed the shares allocated to domestic retail investors by 34 times, “it does not come as a surprise that the stock went limit up,” said Can Oksun, senior manager of trading at Global Securities in Istanbul. Much of the interest in IPOs stems from domestic investors flocking to the market, he said.

Istanbul-based Kervan Gida plans to use 55% of the funds from the IPO for an acquisition in Europe within the next three years, 25% for investments in Turkey to expand its jelly and licorice lines, and the remainder for debt repayments to cut its foreign-currency positions, the company said.

The $60 million IPO is the biggest on Borsa Istanbul since discount grocery chain Sok Marketler Ticaret AS’s $538 million share sale in 2018, according to the capital markets regulator’s website.

Kervan Gida, which exports almost 60% of its production mainly to the U.S., the U.K. and Iraq, has nearly 36% market share in Turkey, compared with 43% for Haribo, which is owned by Bonn, Germany-based sweet maker Haribo GmbH & Company KG.

The depreciation of the lira against the dollar benefits Kervan Gida because its foreign currency-based raw material costs are less than its income from abroad. Consolidated net sales rose 41% to 469 million liras in the first half compared with a year earlier, while net income jumped 87% to 49 million liras.

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