In a bid to calm fears of a share overhang, Turkish Deputy Prime Minister Ali Babacan insisted on October 22 that the country will not make a secondary public offering (SPO) of Vakifbank ahead of the planned listing of another 20.8% stake in Halkbank.
Investors are worried that a potential rush of share issues will depress Turkish banking shares after speculation about a Vakifbank offering grew this month. However, according to Reuters, Babacan stressed in an interview with broadcaster NTV that Ankara does not currently have an SPO of Vakifbank on its agenda. At the same time, the official appeared to leave the way open for a possible private sale, as he promised the bank will not have more of its shares listed in the near future.
Anticipation of an SPO in Vakifbank increased in early October following an announcement by CEO Suleyman Kalkan that the treasury is set to buy the 58.5% stake held by state holding Director of Foundations. Vakifbank Pension Fund is also likely to transfer its 16.1% stake in Vakifbank to the same ministry, handing Ankara a 75% holding.
Babacan's promise backs up Kalkan's claim on October 3 that the purchases by the state are not part of a privatisation process. However, the CEO's revelation of the forthcoming deal still hit Vakifbank's share price for 4% or so.
"The possible alternatives for the privatization of Vakifbank can be an SPO or a block sale," analysts at BGC Partners wrote last week. "We believe an SPO is not likely for Vakifbank in the near term, as the bank is currently trading below its book value as a result of its low RoAE [return on average equity] and the government should not be willing to privatize the bank below its book value. We also believe that the government should not care to lose a controlling stake in Vakifbank as long as they own the majority stakes in Ziraat Bank and Halkbank. In that sense, a block sale of a majority stake in Vakifbank to a strategic shareholder is a more likely alternative..."
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