* Offer set to raise $2.3-2.7 bln
* Govt has changed privatisation strategy
* Demand seen from Asian wealth funds
By Ebru Tuncay and Evren Ballim
ISTANBUL, Nov 14 Bookbuilding began on Wednesday
in the secondary public offering of state-run Turkish lender
Halkbank, a share sale which could be Europe's third
biggest this year and the largest ever in Turkey.
The government is hoping the sale of 20.8 percent of the
lender will help lift what have been disappointing privatisation
receipts in recent years, with tough funding conditions causing
the postponement of several previous tenders.
A price range of 13.80-15.90 lira per share was set for the
offering of 299 million shares, meaning it is expected to raise
between 4.1-4.8 billion lira ($2.3-$2.7 billion).
That would make it the third biggest share sale in Europe so
far this year after Italian lender UniCredit's $9.6
billion rights issue in January and Russia's sale of a $5
billion stake in Sberbank in September, according to
Thomson Reuters data.
Bookbuilding is due to close on Friday.
Weaker-than-expected privatisation revenue has put pressure
on Turkey's finances in recent years, with high valuations and
the impact of the euro zone crisis taking their toll.
Finance Minister Mehmet Simsek told Reuters in September
that the government's privatisation strategy would change and
that secondary public offerings of some state assets were a
The country's budget deficit is expected to exceed the
government's 2.3 percent forecast this year.
ASIAN SOVEREIGN WEALTH FUNDS
Halkbank has 102 billion lira in assets and is Turkey's
second largest state lender, with a market capitalization of
19.9 billion lira. It controls around 10 percent of Turkey's
banking sector deposits.
Turkey holds 75 percent of the bank and the remaining 25
percent is free float.
"There will be new funds inflows from different regions,
especially after the Fitch ratings upgrade," said one source
involved in the offer.
Turkey regained its investment grade credit rating last week
in a move long coveted by Ankara, endorsing an economic
transformation achieved in the past decade under Prime Minister
Following on from the sovereign ratings upgrade it also
upgraded the issuer default ratings of nine Turkish banks
including Halkbank on Tuesday.
"When we look at the multiples it is cheap compared to the
banking averages. Some analysts forecast a price of 19-20
lira... We expect significant demand," said Seniz Yarcan, head
of brokerage Yatirim Finansman, which is in the SPO consortium.
Istanbul's main share index has rallied 40 percent
since the start of 2012. Turkish banking shares have
risen 52 percent over the same period.
Turkey raised $1.85 billion by selling 25 percent of
Halkbank in an initial public offering in 2007.
Turkey's previous largest share sale was an initial public
offering of a 15 percent stake in fixed-line phone company Turk
Telekom in 2008, which raised $1.9 billion.
Halkbank's third-quarter net profit rose 19 percent to 599.9
million lira, above a Reuters poll forecast of 529 million lira.