Türkiye Ranks Among the Top in Europe for IPOs in 2024: A Sign of a Stronger Market?

A similar trend has been observed in Türkiye, where the number of IPOs decreased by 33% compared to the previous year, dropping to 34, while proceeds fell by 25%, amounting to 60 billion TRY.

However, despite these trends, Türkiye ranked first among European countries in terms of IPO number in 2024. Despite high inflation, Türkiye’s IPO number in 2024 raises questions about the underlying reasons driving companies towards public offerings.

What is IPO?

An IPO refers to the process through which a company offers its shares to the public and begins trading them on the stock exchange. According to the Capital Markets Law No.6362, an IPO is defined as a public offering made with the aim of purchasing capital market instruments, followed by the actual sale resulting from such an offer. Companies typically raise funds by issuing new shares or selling shares held by existing shareholders. IPOs are subject to supervision by the Capital Markets Board (CMB), and the process requires meticulous legal and financial planning. Before participating in an IPO, investors must carefully review the company’s prospectus, research reports, pricing reports, and financial statements. Additionally, the company’s reputation in the industry, its ownership structure, and its management team should also be evaluated.

An IPO also enhances their transparency and reputation, offering new financial opportunities to investors.

Additionally, IPOs allow companies to communicate financial information via the Public Disclosure Platform (PDP), increasing their visibility and enabling them to reach a broader investor base. However, an IPO does not always come without drawbacks. For companies, the IPO process often leads to high costs, as legal, financial, and operational regulations can consume significant resources, requires stricter audits and additional reporting obligations, and leads to prolonged bureaucratic processes.

IPOs in Türkiye

Although the number of IPOs in 2024 has decreased, there has been a significant increase of IPO numbers in Türkiye recently. Some experts consider this increase to be a sign of market growth, while others attribute it to the effects of high inflation. Considering the country’s inflation rate, the view that rising interest rates have led to reduced access to traditional financing, thereby encouraging companies to go public, is widely accepted by economists. Furthermore, the increasing costs of private equity financing, tightening credit conditions, and fluctuations in exchange rates have made IPOs more attractive. Recent legal reforms and government incentives, such as the CMB’s decision on March 28, 2024 (No.2024/17), made the process more accessible, particularly in priority sectors like energy, chemistry, agriculture, and defence. These developments have increased companies’ search for funding for new projects and their growth demands.

Conclusion

In this context, the increase in IPOs in Türkiye demonstrates that, despite economic challenges, companies are utilizing public offerings as an alternative means to meet their growth and financing needs. Although some companies face challenges in maintaining stability after going public and the process of going public alters their organizational operations, this increase has the potential to generate positive outcomes in the market. Based on evaluations, it is expected that the momentum in Türkiye’s financial markets will continue in the coming years.