Istanbul Advances IPO Plan for $10 Billion Gas Network - Latest Global News

Istanbul Advances IPO Plan for $10 Billion Gas Network

Istanbul authorities are resuming a plan to privatize the city’s gas network in what could be one of the largest IPOs ever in Turkey.

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(Bloomberg) — Istanbul authorities are resuming a plan to privatize the city’s gas network in what could be one of Turkey’s largest initial public offerings ever.

An initial public offering of the Igdas gas network is moving forward, according to Neslihan Vural, head of financial services at Istanbul Metropolitan Municipality. She estimated the company could be worth up to $10 billion once increased gas tariffs are approved. The government wants to gradually reduce its share from the current over 90% to less than 20%, she added.

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“I am for privatization,” Vural said. “The community should at some point return to pure municipal work.”

Igdas has long been the crown jewel on Istanbul’s privatization list, although an attempt at an IPO failed in the early 2010s. With Turkey’s opposition party now holding a majority in Istanbul’s city council, local officials see an opportunity to push forward fundraising plans to build infrastructure and strengthen their influence over the city.

While a city council directive allowing the IPO is still in effect on the first attempt, legal work still needs to be done and the company’s charter needs to be adjusted before authorities can hire investment banks, Vural said. The company had revenue of 35.8 billion lira ($1.1 billion) in 2022.

Other potential listings include parking lot operator Ispark, water bottler Hamidiye, bread maker Halk Ekmek and others, according to Vural. Ispark could come to Igdas, she said.

There are a number of projects in Istanbul that need financing. These include building a second waste-to-energy plant, improving subway lines and purchasing 10,000 taxis to increase the current fleet by 50%, Vural said.

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Election flashpoint

Funding for Turkey’s major cities was a flashpoint in local elections in March. Ozgur Özel, leader of the opposition Republican People’s Party (CHP), accused President Recep Tayyip Erdogan of withholding state funds as punishment for perceived disloyalty from urban voters. The government denies the accusation.

Now Finance and Finance Minister Mehmet Simsek is trying to restore confidence in Turkey’s economy by holding international investor meetings to announce the country’s return to more orthodox policies. Simsek signed Istanbul’s $715 million sale of unsecured green bonds in November and is expected to approve financing for four metro projects, including a new line worth $925 million, Vural said.

The municipality plans to raise 1 billion euros ($1.1 billion) this year by tapping capital markets and international financial institutions such as the European Bank for Reconstruction and Development and commercial banks, Vural said.

In addition to planning ESG-friendly bond sales, Istanbul aims to raise $225 million through an international bond offering. As part of the agreement, a Bank of America Corp. and London-based BancTrust Investment Bank Ltd. Special purpose vehicle set up to provide a loan after selling bonds in foreign markets, Vural said.

– With support from Robert Brand.

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