Halk REIT, Halkbank's real-estate subsidiary, will increase its capital to TRY662.5mn from TRY477mn and offer TRY185.5mn of its nominal shares to the public, implying a 28% free float. The IPO price was set as TRY1.35 per share and the IPO size will be TRY250.4mn (USD140mn). After the IPO, Halk REIT's NAV will be TRY1,209mn or TRY1.83 per share and the TRY1.35 IPO price indicates a 26% NAV discount. In terms of IPO allocation, 80% of the IPO will be allocated to domestic retail investors, 10% will be allocated to domestic institutional investors and the rest to foreign institutional investors. In order to establish pricing stability after the IPO, Halk REIT may buy back its shares, which amounted to 10% of the IPO proceeds within 30 days after the first trading date. 
IPO proceeds will be used for: i) The Istanbul Finance Center, ii) Dedeman Park Levent Hotel, iii) Eskisehir Odunpazari project, iv) Kocaeli Sekerpinari lot and v) acquisition of new plots. Halk REIT's portfolio size was TRY1,079mn, of which 39% is comprised of buildings, 47% is comprised of the plot and 13% is made up of on-going projects. 
With regards to the impact on Halkbank's valuation, we expect the effect of the IPO to be trivial on Halkbank's valuation. We base our argument on the fact that the 99.84% stake held by Halkbank was valued at TRY575mn based on its 9M12 financials and after the IPO, the 72% stake that will be held by Halkbank will be valued at TRY643mn, which will result in a value creation of TRY69mn, indicating a 25bp contribution to our fair value. 
Source: bne