TSKB's 2023 Investment Banking Recap and 2024 Outlook
Having sustained its contributions to climate finance, renewable energy, the sustainable redevelopment of earthquake-affected regions, and investments aligned with Sustainable Development Goals (SDGs) across diverse sectors in 2023, TSKB has conducted an evaluation of its investment banking performance for 2023 and presented its outlook for 2024. Highlighting TSKB’s achievements in investment banking, Poyraz Koğacıoğlu, TSKB Executive Vice President of Investment Banking, stated that the Bank concluded a successful year and went on to add: “We anticipate a deceleration in IPOs during the initial quarter, influenced by the adverse price trends observed in recent IPOs and the impact of upcoming elections, with a resurgence projected for the latter half of the year. The predictability of interest rates and the extension of maturities are expected to positively influence both the quantity and size of debt instrument issuances.”
Operating under the responsibility of being Türkiye’s first privately-owned investment and development bank, TSKB (Industrial Development Bank of Türkiye) completed a successful year in investment banking. Reflecting on TSKB’s and the sector’s results for 2023, Poyraz Koğacıoğlu, TSKB Executive Vice President of Investment Banking, provided key insights into the expectations for 2024.
TSKB Executive Vice President Poyraz Koğacıoğlu: “Through the transactions concluded in 2023, we have offered brokerage and advisory services for deals exceeding USD 1.5 billion in the past 4 years.”
Poyraz Koğacıoğlu noted that the interest in debt instruments surged as interest rates became more predictable throughout 2023, adding, “The number of equity investors surpassed 8.6 million, breaking an all-time record. A total of TL 73.3 billion was raised in 55 IPOs, with an average IPO size of TL 1.3 billion. The foreign share in the stock market, which had declined to 27%, rebounded to 38% by the end of 2023. Real sector debt instrument issuances, which experienced a slowdown before the elections, gained momentum in the second half of the year. In the last quarter of the year, maturities in corporate sector debt instruments reached pre-pandemic levels, with a maturity period of 1-2 years.”
Reflecting on TSKB’s transactions in 2023, Koğacıoğlu noted, “In September, we successfully concluded the IPO of Reeder Teknoloji, valued at TL 2 billion, breaking the record for the number of investors in public offerings with 4.2 million investors. In October, we completed the TL 1.3 billion IPO of Borlease Otomotiv, surpassing our previous record with 4.3 million investors. In the second half of the year, we facilitated the issuance of Lease Certificates amounting to TL 1.5 billion on behalf of MLP Sağlık Hizmetleri.”
Discussing the mergers and acquisitions market in 2023, Koğacıoğlu provided the following insights: “Global M&A transactions experienced a 20% decline last year, with a total transaction value of around USD 3 trillion. This amount marks the lowest level since 2013, when total transaction value stood at USD 2.8 trillion. Numerous transactions were delayed due to the high cost of financing, economic uncertainty, and volatility. In completed transactions, the multipliers were observed at a reduced level compared to preceding years. Like the global market, the M&A landscape in Türkiye experienced a decline in transaction values, decreasing from USD 11.5 billion in 2022 to approximately USD 9 billion in 2023. 2023 was a year where buyers factored in elevated costs and risks in their assessments, while a significant number of sellers held expectations for higher valuations. Numerous transactions anticipated for 2023 were postponed, billion-dollar deals failed to materialize, and there was a decline in the number of large transactions. Throughout this period, the sectors that garnered the highest levels of investor interest encompassed technology, internet and mobile services, financial services, energy, gaming, manufacturing, and healthcare. The energy sector secured the top position with regard to its transaction value.”
Expressing satisfaction in facilitating strategic agreements that bolster sustainable development, Koğacıoğlu stated, “In 2023, we successfully concluded the 100 percent sale of Vega Rüzgar Enerjisi Elektrik Üretim A.Ş. to Enerjisa Enerji Üretim A.Ş., with TSKB serving as the exclusive sell-side financial advisor. Over the past four years, we have delivered brokerage and advisory services for 6 IPOs, facilitated 9 acquisitions, and overseen more than 20 debt instrument issuances, cumulatively surpassing USD 1.5 billion in value.”
TSKB Executive Vice President Poyraz Koğacıoğlu: “We anticipate a deceleration in IPOs during the initial quarter, with a resurgence projected for the latter half of the year.”
Commenting on expectations for 2024, Koğacıoğlu remarked: “We anticipate a deceleration in IPOs during the initial quarter, influenced by the adverse price trends observed in recent IPOs and the impact of upcoming elections, with a resurgence projected for the latter half of the year. We expect significant IPOs to materialize in the latter half of the year. In case of foreign investor interest, we might witness IPOs exceeding the currently planned sizes. Expanding the sales and asset size criteria, as well as the Borsa İstanbul market listing amount criteria for IPOs, will considerably raise the average size of IPOs compared to 2023. The predictability of interest rates and the extension of maturities are expected to positively influence both the quantity and size of debt instrument issuances.”
Koğacıoğlu, in his remarks on the expectations for mergers and acquisitions in 2024, stated, “The necessity to diversify supply chain risk across various regions globally has become even more crucial, particularly in light of the pandemic and geopolitical risks witnessed in recent years. Türkiye’s strategic geographical location and its membership in the customs union with the European Union countries provide a substantial advantage for exports. Furthermore, the competitive workforce and advanced industrial infrastructure in our country contribute to the growing interest in industrial companies. We anticipate a rise in renewable energy and technology-oriented transactions in 2024, alongside industrial companies capable of generating income in foreign currency, managing exchange rate risks, prioritizing exports, and participating in value-added production.”
Türkiye Green Fund set to initiate investments in the final quarter of 2024
Koğacıoğlu, recalling the Türkiye Green Fund, the first venture capital investment fund financed by a World Bank loan, said, “TSKB entered into a 24-year loan agreement worth USD 155 million with the World Bank to establish the Türkiye Green Fund, secured by the Ministry of Treasury and Finance. We aspire to aid environmentally friendly and green technology firms through this fund, primarily dedicated to fostering companies’ green transition initiatives via equity financing and the mobilization of private capital, thus enhancing climate finance in Türkiye’s capital markets. Furthermore, we intend to make substantial contributions to our country’s 2053 Net Zero target by actively participating in the green transformation endeavors of various companies. The fund will be established through Maxis Venture Capital Portföy Yönetimi A.Ş. in the first half of this year, with our investment activities slated to commence in the final quarter of 2024. In addition to the USD 155 million provided by the World Bank, the project aims to achieve a total investment amount exceeding USD 400 million, comprising USD 100 million at the fund level and USD 150 million at the company level.”
