FEDERATION OF EURO-ASIAN STOCK EXCHANGES
SEMI ANNUAL REPORT OCTOBER 2006
IS INVESTMENT
Is Investment aims to become the foremost
player in the capital markets–not only in
Turkey but also in the region.
Ilhami Koc
General Manager
Emerging markets continue to benefit from the
search for higher returns in a low-yield
environment. With unacceptably low interest
rates in G7 countries, a large volume of
liquidity has been propelled into emerging
market assets through yield hungry hedge
funds. The global appetite for carry trade is
expected to remain strong in 2006, despite
narrowing interest rate differentials vis-à-vis
the US and the Euro zone.
Improving economic fundamentals underpin
the positive bias towards emerging markets.
Emerging market economies have made
substantial progress in remedying their deep
rooted structural imbalances in recent years.
In line with the implementation of correct
economic policies, the vulnerability of
emerging economies has eased considerably
in terms of public debt as a proportion of GNP
and their current account deficits.
The Turkish economy started 2006 basking in
the glow of an upbeat conjuncture, with an
easing in worries over public debt dynamics,
remarkable success in the privatization of big-
ticket state assets, a taming of the deep-
rooted inflationary expectations and the
establishment of a sustainable and high
growth environment. Success in implementing
the medium-term IMF-endorsed economic
program and the prospect of EU membership
has provided a solid story in attracting ample
foreign capital.
As the foremost player in the Turkish capital
market, Is Investment stands out as the best
business partner both for portfolio investors
and strategic investors. Is Investment was
established in 1996 as a subsidiary of Is
Bank, its main shareholder with a 92% share,
which has always been a pioneer in the
capital markets. Is Bank has accomplished
many firsts in the establishment and
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development of the Turkish capital markets; it
has the highest number of investors, manages
the largest investor portfolios and has handled
the majority of public offerings. Besides
traditional brokerage activities, Is Investment
has diversified into financial services, like
corporate finance activities, investment
advisory and international capital market
activities.
Is Investment’s Corporate Finance
Department offers a wide range of services
including initial and secondary public offerings
of public and private companies, public
offerings of various debt instruments,
consultation services for mergers &
acquisitions, private equity, venture capital
projects and strategic planning and
restructuring.
Is Investment has a local investor base and an
expanding global investor base, mostly in
Europe, the United States, the Middle East
and Central Asia, and is eager to broaden its
services in line with the increasing global
demand and liquidity.
Is Investment aims to become the foremost
player in the capital markets–not only in
Turkey but also in the region–setting a
benchmark which will be followed by other
investment banks and brokerage houses,
specifically in the Middle East and the
Commonwealth of Independent States (CIS).
We have all the means and tools to achieve
our goal. The establishment of a rep-office in
Kazakhstan and subsidiary in London are the
first steps in our quest to reach this goal.
Is Investment, with its experienced staff, is the
only brokerage house in Turkey belonging to
the International Securities Markets
Association. Is Investment is Turkey’s premier
investment bank in international capital
markets, with the largest transaction volume in
the primary and secondary markets. In the last
two years (2004-2006), Is Investment has
reached a volume of almost US$ 2 billion in
the primary markets.
Turkish Treasury issues accounted for more
than US$ 1 billion of this amount, with other
emerging market issues (primarily Russian
and Kazakh credits) accounting for the other
US$ 1 billion. Is Investment was also
mandated as the co-manager in three of the
Turkish Treasury’s Eurobond issuances (US$
1.25 billion of 2014 maturity, 9.5% notes, US$
2 billion in 2025 maturity 7.375% notes and
US$ 1.5 billion in 2036 maturity, 6.875%
notes). It was also mandated as a co-
manager in three corporate Eurobond issues,
including Petrol Ofisi in Turkey (US$ 175
million in 2009 maturity, 9.75% notes),
Intergas Central Asian in Kazakhstan (US$
250 million in 2011 maturity, 6.875% notes)
and Finansbank Russia (US$ 250 million in
2008 maturity 7.9% notes).
In total, Is Investment took part in 27 issues in
2004 and 54 issues in 2005, 14 of which were
in Turkish credits and 67 in other Emerging
Markets.
Examples of these issues include Finansbank
Russia, Vneshtorgbank, the Industry and
Construction Bank of Russia, Gazprom,
Sistema, Megafon, the Russian Standard
Bank, Vimplecom and Alrosa in Russia; KKB,
Halyk Bank, TengizChevron Oil, ATF Bank,
Nur Bank and Center Credit in Kazakhstan;
and Cosan, Gerdau, CNO in Brazil. In the
secondary markets, Is Investment had a
combined transaction volume of more than
US$ 4.6 billion in both 2004 and 2005, of
which about 90% of the transactions were in
fixed income instruments with the rest in
global equity markets. However, with greater