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Turkey: No crisis of faith

Despite a long-running battle between the government and the army over Turkey’s religious and political future, foreign investors continue to flood the country with capital. That means plenty of business for foreign and domestic investment banks, and for a new wave of small but ambitious boutiques. Lawrence White reports.

Strength of economy should outweigh political crisis

AS AN INDICATION of investors’ confidence in Turkey’s rehabilitation, the success of the Halkbank IPO in the middle of a political crisis could hardly be more telling. As the army threatened another coup and a million secularists took to the streets to protest against the perceived Islamist agenda of the government, Goldman Sachs and local firm Is Investment managed to fill the book for the TL2.5 billion ($1.86 billion) state bank privatization with more than $12.5 billion of orders.

"Just three days after the beginning of the Halkbank roadshow," says Ilhami Koc, general manager at Is Investment, "the Turkish market was hit by political tensions. But we, together with Goldman Sachs as the global bookrunner, did not step back. At the end of a successful offering campaign, investors oversubscribed the Halkbank IPO, the largest privatization IPO in Turkish history, by around eight times."

The international investment community seems not to be unduly concerned by the dispute between the secularist army and the Islamic AK party, and the resulting flow of capital is fuelling a strong IPO market. Foreign banks that have traditionally covered the market from overseas are either opening offices in Istanbul or investing in one of the increasing number of local brokers.

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