Frozen Turkish Funds’ Blue-Chip Holdings Sold Off-Market

(Bloomberg) -- Banks overseeing Turkey’s fund liquidations sold about $254 million of blue-chip shares held by frozen funds off-market, in a move that could help remove an overhang on the country’s stock indexes.

TC Ziraat Bankasi AS and Turkiye Is Bankasi AS, which were tasked with overseeing the liquidation, completed the sale on Nov. 3 through an off-exchange placement to investment and pension funds, a notice seen by Bloomberg showed. 

The sale may ease pressure on Turkey’s main stock indexes by removing a major source of uncertainty. Investors have been waiting to see how shares held by funds being wound down would be sold and whether large disposals could hit the market.

The transactions were valued at 12.7 billion liras ($254 million), according to the notice sent by Turkey’s Capital Markets Association to asset managers. The association didn’t immediately comment when contacted by Bloomberg.

Settlement will take place on Wednesday through a conditional transfer mechanism, according to the notice.

The transaction marks a significant step in the liquidation of 131 funds managed by seven asset managers. Regulators ordered the funds to be wound down after a crisis that affected more than 455,000 investors.

The turmoil has erased more than $130 billion from the market value of Turkish stocks since the selloff began in mid-September. It has also kept some investors on the sidelines as they waited for clarity on how the fund holdings would be sold.

The liquidation involved shares of companies that are in the benchmark BIST-30 Index. They were offered in 20 equal blocks at Nov. 3 closing prices. Each package included all 30 stocks in different quantities and was valued at 636 million liras, according to the notice.

Buyers are barred from reselling the shares on Borsa Istanbul for three months. They are also prohibited from using alternative transactions to bypass the restriction, according to the notice.

The framework law on liquidation and compensation process was approved and Turkey started interim payments to investment fund clients last week.

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