Holding and Stock Exchange

What is a Holding Company? How is a Holding Company Established? What are the Advantages of Establishing a Holding Company? What is an Initial Public Offering (IPO)? What are the Benefits of Going Public on the Stock Exchange?

Why is establishing a holding company and going public on the stock exchange important? Why isn't this a goal, especially for family businesses in Türkiye? The US stock exchanges (NYSE + NASDAQ) have over 4,000 publicly traded companies, while in Turkey, the Istanbul Stock Exchange has just around 500. We see global brands in every aspect of our lives, and they are all traded on the stock exchange. They are considered short/medium/long-term investment tools against inflation. Why are they on the stock exchange? Does going public make you a global brand?

What is a Holding Company?

It is a professional corporate organizational structure that refers to the consolidation and corporate management of joint-stock companies operating in the same or different sectors under a single umbrella.

How to Establish a Holding Company?

It is subject to the permission of the Ministry of Trade and is established as a joint-stock company. While there is no minimum capital requirement in the legal framework, the key point is that it will require a high level of capital to be able to acquire at least 51% of the shares of the companies it will bring together and manage their operations and organizations without disruption .

What are the advantages of establishing a holding company?

"Holding Management" meets the needs of the companies under its umbrella by professionally establishing and managing departments in key areas and branches such as accounting, finance, human resources, sales and marketing, distribution and logistics, production, R&D and technology, insurance, investment and risk analysis, foreign trade, trademarks and patents, in order to ensure effective and efficient strategic decision-making. This results in cost savings, particularly in finance, human resources, cost analysis, and process/time management.

The Holding Management maintains oversight and control over its subordinate companies through an effective and efficient organizational structure. It provides professional consulting services to these companies as needed and issues invoices for these services.

For example, the primary task of a tourism company under a holding company is to conduct high-level "tourism activities" within its field. It is expected to focus solely on tourism. It doesn't need to consider any other matters , as the holding company management thinks, decides, and implements them for it.

What is an Initial Public Offering (IPO)?

According to the Capital Markets Law No. 6362;

"Initial public offering (IPO) refers to a general call for the purchase of capital market instruments by any means, and the subsequent sale."

Considering the interest burden , an initial public offering (IPO) is a serious method and strategy for raising funds.

What are the benefits of investing in the stock market?

For companies, an initial public offering (IPO) is the most important step in institutionalization and branding, and it is a strategic move to find cost-free (interest-free) and maturity-free liquidity for both working capital financing and investment financing .

Following the inflow of funds/liquidity generated through the sale of shares offered to the public, the primary focus will be on:

• In financing strategic investments,

• In increasing production capacities,

• Branding,

• Opening up to foreign markets,

• To have a voice on the international stage,

This includes financing activities that require significant resources.

The processes for an initial public offering (IPO), including preparatory work and oversight, structuring, the IPO itself, and post-IPO procedures, must be managed correctly. This process will be managed by brokerage firms authorized by the Capital Markets Board.

For the Initial Public Offering;

• At the right time , (analyzing the economic atmosphere and current market conditions)

• The correct price (finding the correct price through supply/demand balance analysis by investors in the stock market)

• Which is the right method (through a capital increase or a public offering of existing shares?)

This leads to a long-term strategically beneficial decision.

To go public and enter the stock exchange, company shareholders must first have an awareness of "Corporate Governance" and work with expert senior management based on "Merit ." Because while anyone (company/holding owners) can dream, not everyone can enter the stock market! Tracking the status of a stock on the stock exchange via a mobile phone requires serious vision .