The largest property sector public offering of the last 5 years in Europe
The shares in the secondary public offering of Emlak Konut GYO, the largest real estate investment partnership in Turkey, have received a demand of 2,3 times the actual offering. The Emlak Konut public offering has seen interest from over 100 investors in 20 different countries, and has become the largest public offering of the year, which is being undertaken by way of increasing capital, in Central and Eastern Europe, the Middle East and African regions. The size of the public offering has reached 1,6 billion dollars (3,25 billion TL).
The book building period for the second public offering, which aims to increase the paid up capital in Emlak Konut GYO to 3 billion 800 million TL, ended on 8 November. The book building process which had started on 6 November, lasted for 3 days, with the price range being determined as 2.50 – 2.80 TL, and high demand for the shares from investors. While the final public offering price was determined as 2.50 TL per share, the public offering, which totals 1,6 billion dollars (3,25 billion TL) in size, became the largest public offering by way of increasing capital, in Central and Eastern Europe, the Middle East and the Africa regions, as well as Turkey.
104 Foreign Investors have chosen Emlak Konut
80% of the shares which sold by way of the public offering have gone to overseas corporate investors, 10% to domestic individual investors, and the other 10% to domestic corporate investors. In total, a demand worth around 2,5 billion dollars (5,12 billion TL) has been received from 104 different foreign investors. It has also been determined that the demand for the 320 million dollar portion set aside for domestic investors is 3,8 times the actual offering.
The press conference concerning the public offering process was attended by Murat Kurum, the Managing Director of Emlak Konut GYO, as well as Murat Çetinkaya, a Member of the Board of Directors of Halk Yatırım, Elif Bilgili, the CEO of Merill Lynch Investment Bank, Ertan Yetim, the Chairman of the Board of Directors of Emlak Konut GYO, and other Emlak Konut GYO Board Members, Veysel Ekmen, Ali Seydi Karaoğlu, Haluk Sur and Volkan Kumaş.
Murat Kurum, the Managing Director of Emlak Konut GYO, speaking at the press conference, said that they were happy with the demand received for the public offering, which they had instituted in order to create added value for their investors. Kurum stated that they had been holding meetings with investors from the USA and the UK and are now evaluating the demand received from investors together with Merill Lynch and Halk Yatırım (investment), who were managing the process.
Kurum pointed out that demand for the portion set aside for foreign investors had exceeded supply 2 fold, and said, “49% of these foreign investors came from the USA, and 29% from the UK. When observed geographically, foreign investors from a total of 20 different areas, such as the USA, the UK, Canada, Germany, France, the Middle East, South Africa, Holland, Austria, Sweden, Switzerland and Singapore, have registered demand. 104 foreign investors have taken part in this public offering.”
Letter of Credence from Foreign Investors
Murat Kurum also shared a letter received from a large foreign corporate investor, with the press, during the press conference. In short, the letter contains the following statements:
“We are very excited to be entering into a partnership relationship with Emlak Konut. Since we visited the offices of Emlak Konut in April 2013, we have been extremely excited about its business model, its vision in line with its public strategy, and its objectives. A powerful Emlak Konut will be among the global leaders in the areas of town planning and production of housing stock. This will result in the ratio of investment in gross national product increasing, and present Emlak Konut with a very important mission. We have great belief in the macro story of Turkey, and by investing in Turkey, we are actually investing in you, the top level management. We are an organization that likes to invest in a top level management and authorized board of directors who are fully trusted by their shareholders, and who implement their business plans immaculately. And you are at the very front in this category.”
The Largest Real Estate Public Offering In Europe in the Last 5 Years
Kurum stated that the secondary public offering of Emlak Konut was the largest public offering by way of an increase in capital, ever undertaken in Turkey, and said, “When we compare it with other parts of the world, while this is the largest public offering by way of an increase in capital in Central and Eastern Europe, the middle East and the African regions, it is also the biggest public offering in the real estate sector, which is being undertaken by way of an increase in capital, in the whole of Europe, in the last five years.”
Murat Kurum pointed out that Emlak Konut was no longer just the largest Real Estate Investment Partnership in Turkey, but at the same time a giant company which was on the way to going up the world league in the global arena. Kurum also stated that these results were an indication of the confidence felt in the Turkish economy. Kurum said, “During these times when foreign investors are still unable to find a complete signal of stability in the European economy, they have officially recorded the shining star of Turkey by being eager to invest in the largest Real Estate Investment Partnership in the Turkish economy, which is showing a consistent level of growth.”
“We also had this demand in May”
Murat Kurum, the Managing Director of Emlak Konut GYO, answered questions following the press conference, stating that they had been on a road show in May for the secondary public offering, and received the same amount of demand. However, as at the time the newspaper headlines made it appear that Turkey was on fire, they had withdrawn the public offering to ensure that foreign investors did not make losses.
He stated that the company’s shares would once again be traded on the stock exchange from Wednesday, 13 November. Murat Kurum also pointed out that with this public offering Emlak Konut would possess the capacity to carry out over 10 billion TL worth of business. The company will invest in new land a short time after it has obtained its new resources.
Minimum Discounts were Given
Murat Kurum, who also responded to a question concerning the discount rates of the shares, said that on the day trading in the shares of the company was suspended, its price on the stock exchange was 2.77 TL, which based on the fact that the level of discount was around 10 per cent. He said, “This is actually the minimum discount rate that can be offered in the world. We would have acquired sufficient demand even if we hadn’t offered this discount, but we determined the price at this level in order to ensure a variety among our foreign investors. We are obligated to protect our investors in the forthcoming periods also.” The price of the secondary public offering had been determined as 2.50 TL.
Not Every Company Can Achieve This
Elif Bilgili, CEO of Merrill Lynch, responded to a question asking whether the demand for the company’s shares had been affected by the fall in the stock market on Friday, and said, “There were those who lowered their demand, and those also who raised them. However, the uncertainty in the markets – which originates from the Fed – will continue for a long time yet. To receive such a demand despite this shows the trust felt in Turkey and in Emlak Konut. Not every country, or every company can achieve this.”
Murat Kurum, who responded to a question suggesting that there was a bubble in the housing market, said, “Even just the demand we have seen for our last two projects is sufficient to answer that question. We had 3 thousand applications at Hoşdere and 25 thousand at Kayabaşı. There is demand, and there is trust. Foreign investors are monitoring our country better than us.”
“Real Estate Investment Partnerships will gain Trust and Confidence”
Murat Kurum said that the demand they had received for the shares of the company would also give trust and confidence to other Real Estate Investment Partnerships who were considering going to public offering.
Emlak Konut GYO, founded in 1953, became a Real Estate Investment Partnership in 2002, and had the first public offering of its shares in 2010, as the largest real estate investment partnership in Turkey.
The secondary public offering was carried out under the leadership of Halk Yatırım Menkul Değerler A.Ş., while the offering was led by Merrill Lynch International abroad. Emlak Konut and TOKİ (Housing Development Administration of Turkey) have given the undertaking not to sell any shares for 180 days following the public offering. In addition, up to 10 per cent of the revenue received from the public offering will be able to be used in order to establish stable prices.
Emlak Konut GYO’s Profits Exceeded 856 Million TL in September
The company has sold close to 60 thousand independent units across 65 property projects since 2003. Its annual turnover, as of 30 September 2013, has reached 4.3 billion TL. The number of independent units sold in the period to September 2013 was more than 10 thousand. Murat Kurum stated that some projects were not included in this figure, and said, “Therefore, we are anticipating that we will be able to achieve our target of 15 thousand sales by the end of the year.”
The net profits of the company, which had been 523 million TL in 2012, had reached 886 million TL by 30 September 2013.