Turkey’s Nasdaq-listed Hepsiburada e-commerce platform agrees $14mn compensation for IPO investors in US

Turkey’s e-commerce platform Hepsiburada (Nasdaq/HEPS) has agreed to pay a total of $14mn in compensation to investors who filed two lawsuits against the company, its board members and senior management, the underwriters of its initial public offering (IPO) and the selling shareholder TurkCommerce B.V., Hepsiburada informed the market in a filing with the securities exchange commission (SEC).

Story chart: Spot the nosedive.

TurkCommerce, a unit of Franklin Templeton (New York/BEN), will contribute $4mn to the payment. The deal is subject to the approval of the courts.

In September 2021, Canada-based IWA-Forest Industry Pension Plan filed a lawsuit (case no: 1:21-cv-08634-PKC) as the lead plaintiff at the US District Court for the Southern District of New York.

In October 2021, a second lawsuit (case no: 655701/2021) was filed at the Supreme Court of the State of New York.

The Turkish competition board, meanwhile, has been conducting investigations into Turkish retailers including Hepsiburada.

In June 2021, Hepsiburada sold a 20% stake in an IPO for a consideration of $728mn. The share price stood at $12.

JPMorgan (New York/JPM), Bank of America Merrill Lynch (BofA Securities Inc., a unit of Bank of America (New York/BAC)), Goldman Sachs (New York/GS), Morgan Stanley (New York/MS) and UBS (Zurich/UBSG) Securities acted as intermediaries.

As of December 9, Hepsiburada’s share price stood at $0.7.

Turkey’s Dogan family controls a 65.4% stake in the company and Franklin Templeton (New York/BEN) controls 14.6%.

The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) also have stakes in Hepsiburada via Franklin Templeton, but they have not released exact figures on their holdings.

Following the IPO, Hepsiburada chair Hanzade Dogan Boyner became a billionaire, but that status did not last long.

Hepsiburada’s share price has nosedived since its IPO. The company has always been lossmaking and does not anticipate paying dividends.

The Turkish e-commerce market has its origins in the 1990s. In 2021, the combined e-commerce volume in Turkey was up 69% y/y to Turkish lira (TRY) 382bn ($29bn) from TRY 226bn ($30bn).

Retail e-commerce amounted to TRY 234bn in 2021.

On December 9, Emre Ekmekci, head of the Turkish Association of E-Commerce Operators (ETID), said that Turkey’s e-commerce volume was expected to reach TRY 700bn ($38bn) in 2022.

Online shopping accounted for 18% of the Turkish retail market in 2021, up from 16% in 2020. The E-commerce volume also accounted for 5% of the country’s gross domestic product (GDP) in 2021, up from 4% in 2020.

In the country’s currently fragmented e-commerce market, Trendyol, launched in 2010 and serving as the Turkish unit of China’s Alibaba (New York/BABA; Hong Kong/9988) since 2018, is the market leader with a market share standing at about 30%.

Hepsiburada (Nasdaq/HEPS), launched in 2000, reported a gross merchandise value (GMV) of TRY 26bn, representing a 9% share in Turkey’s combined retail e-commerce volume.

In Q3 2022, Hepsiburada had 12mn active customers and around 94,000 active merchants.

n11 (formally Dogus Planet), a JV of Getir, Dogus Holding and SK Group (Seoul/034730), has a market share of about 8%.

In July 2022, eBay (Nasdaq/EBAY) shut down its Turkish unit GittiGidiyor. It was launched in 2001, served as eBay’s Turkish unit from 2011 and accounted for a market share of around 4%.

Amazon (Nasdaq/AMZN) entered the Turkish market in 2018 and remains a relatively small player, compared to rivals. Morhipo, founded in 2011 by Boyner Group, has a similar status.

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