Winemaker in historic Gallipoli in first Turkey bond sale  – report

A small Turkish winemaker located on the Gallipoli peninsula, a famous World War One battleground, plans to sell bonds this week in the first ever transaction for the industry.

Suvla, which controls 1.5 percent of Turkey’s highly fragmented wine market, is seeking to sell 11 million liras ($1.9 million) of two-year debt via local asset manager Istanbul Portföy, Bloomberg reported on Tuesday.

The company is operating in a market whose growth has been limited by high taxes on alcohol and bans on advertisements under the Islamist-leaning government of President Recep Tayyip Erdoğan. But Turkey’s wine industry is steeped in history and, despite the restrictions, has enjoyed a resurgence in recent years.

Suvla has increased revenue by an average of 50 percent annually since it was formed in 2012 and will probably be large enough to hold an IPO in 2021 or 2022, founder and owner Selim Zafer Ellialti said, according to Bloomberg. Production is expected to increase by 25 percent this year, giving the firm 18 million liras in earnings before taxes, interest, depreciation and amortisation compared with 12-14 million liras last year, he said.

The Battle for Gallipoli in north western Turkey was the scene of intense fighting between Turkey and Allied Powers in 1915 and 1916. The campaign started with a failed naval attack by British and French ships and resulted in heavy casualties, especially among Australian and New Zealand soldiers, and an evacuation, which began in December 2015. The region is agricultural and leafy and a popular tourist destination, especially for the ancestors of soldiers lost in battle.

Suvla is also negotiating with foreign investors such as the European Bank for Reconstruction and Development (EBRD) for equity financing, Ellialti said.The average tax rate on wine in Turkey has surged more than five-fold since 2009, Bloomberg said, citing official data. The retail price of wine has more than tripled in the period, it said.