Commissioned early 2015
With many Turkish companies to list for the first time this year, with some predicting 1,000 new listings this year, we ask if these companies are ready for the scrutiny this will undoubtedly place them under?
This raft of new listings expect is of course exciting news for the Turkish economy and presents significant opportunities for growth. From our discussions with analysts, the broad impression of Turkish standards of disclosure and corporate governance is that they are good in comparison to practices in other emerging markets but that when compared to the companies in developed markets, they still lack behind. It has taken some time for even the biggest Turkish companies to reach a satisfactory level. Moreover, simply doing the minimum required to meet regulatory standards will not help Turkish companies stand out when dealing with competing internationally with companies that go far beyond the basic requirements and work overtime to engage with investors. And while listing can be a great opportunity for a company to increase its access to capital, at the same time, if not done right and backed up by a well-communicated narrative it can risk exposing a company to unnecessary risk.
Some even question, given the fragile state of the Turkish economy currently, whether such a move is entirely advisable. The economist, Turan Bozkurt, talking to Global Post (“Turkey eyes Istanbul as int’l financial hub”, 21 January, 2015), questions the current strength of the market, citing what he perceives as an over-dependence on real-estate speculation making for a poor foundation for investment. With Turkey in and out of the international media and with war on its doorstep, scrutiny is the key word at the moment. Increased attention can be a fantastic thing, bringing with it new introductions and greater interest. If companies are not prepared, however, this increased interest can equally be damaging. Ultimately, to take advantage of these new opportunities will require work. There is no such thing as a free lunch. The coming wave of listings could provide some Turkish companies with a great platform but they will have to work hard to show increasingly wary investors that they are a safe bet. This will involve a targeted, well-strategized campaign of bringing their activities in line with global best practice and then communicating this in a professional, decisive and coherent manner.