Turkish grocer Sok Marketler has been calling investors spooked by its deal to buy shares at a premium from its controlling shareholder, just weeks after issuing them to shore up its listing, said a person familiar with the deal.
Sok shares have fallen by some 9% since it disclosed the buy-back from Yildiz Holding on Friday, and they were down 1.4%, at 8.76 lira, at 15.34 GMT on Tuesday.
IPO Price Slash
One international investor who participated in the $531 million initial public offering last month and has shares in Sok confirmed that it was in contact with the discount grocer.
"We are aware of the situation and have been engaging with the company," the investor said, on condition of anonymity.
Sok was forced to slash its IPO price and get unlisted shareholder Yildiz Holding to buy a direct stake via a private placement in order to complete the listing, amid a downturn in demand for new Turkish listings.
Sok and Yildiz did not respond to questions from Reuters.
Yildiz, which owns food brands including Godiva chocolate and McVitie's biscuits, is struggling with foreign-currency debt as the Turkish lira weakens, and last month signed a deal with its banks to refinance $5.5 billion in debt.
Sok, which operates some 5,500 supermarkets across Turkey, said late on Friday that it had bought back 33.4 million shares – or 5.46% of its outstanding stock – from Yildiz for 10.5 lira a share, to 'utilise commercial opportunity and make investment'.
The price paid represented a 10% premium to Sok's market value as of Friday's closing share price, and essentially reversed its earlier $77 million capital increase.
On Tuesday, Sok said that the deal was subject to the same lock-up that followed its IPO, and it would therefore be reimbursed by Yildiz if the market price at the end of the period was less than what it paid. The IPO lock-up ranged from six to 18 months, according to the prospectus.
Lira Sell-Off
Turkish markets have been hit by a sell-off in the lira over concerns about President Tayyip Erdogan's grip on monetary policy. The central bank has since stepped in with aggressive rate hikes to avert a currency crisis.
Even before that, Turkish equity markets had been hit by weakening demand for new listings. While Sok was forced to cut its price and extend its book-building, some other retailers cancelled plans to list.
"If you are an investor and you see this, it's going to put you off," the source familiar with the deal said. "Demand for Turkish deals was already much lower."
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
