MAKING THE IPO DECISION...

Table of Contents 1. MAKING THE IPO DECISION... 4 1.1. Financial Resources... 4 1.2. Liquidity... 4 1.3. Publicity (Domestic and Worldwide)... 4 1.4. Institutionalization... 4 1.5. Secondary Public Offerings... 5 1.6. Credibility... 5 1.7. Global Exposure... 5 2. PREPERATION FOR A SUCCESSFUL IPO IN BORSA İSTANBUL... 6 2.1. Constitution of an Internal IPO Task Force... 6 2.2. Selection of the Intermediary Institution... 6 2.3. Selection of the IPO Method... 7 2.4. Preparation of Financial Statements and the Selection of an Independent Auditor... 7 2.5. Ordinance of the General Assembly and the Amendment of the Articles of Association 7 2.6. IPO Price Determination... 8 2.7. Preparation of Documents Required in the Application... 8 3. COSTS ASSOCIATED WITH AN IPO IN BORSA İSTANBUL... 9 3.1. Breakdown of Costs in the Public Offering of Shares... 10 3.1.1. Fees Paid to Investment/Brokerage House(s)... 10 3.1.2. Fees Paid to the CMB... 11 3.1.3. Fees Paid to Borsa İstanbul... 11 3.1.4. Fees Paid to the Central Securities Depository (CSD)... 12 3.1.5. Other Costs... 12 3.2. Breakdown of Costs in the Public Offering of Debt Instruments... 12 3.2.1 Fees Paid to Investment/Brokerage House(s)... 12 3.2.2 Fees Paid to the CMB... 13 3.2.3 Fees Paid to Borsa İstanbul... 13 3.3. Breakdown of Costs in Warrants and Certificates... 14 4. ADDITIONAL CONSIDERATIONS FOR FOREIGN IPO CANDIDATES... 15 2

5. SEVEN STEPS OF AN IPO APPLICATION IN BORSA İSTANBUL... 16 5.1. Applications to Borsa İstanbul and the CMB... 16 5.2. Investigation of the Company by the CMB and Borsa İstanbul... 17 5.2.1 Qualitative Investigations... 17 5.2.2 Quantitative Investigations... 17 5.3. Applications to Takasbank and CSD... 17 5.4. Designation of the Trading Market... 18 5.5. Approval of the Prospectus... 18 5.6. Public Offering and Reporting the Sales Results... 18 5.7. Listing and the Inception of Trading in the Exchange... 18 6. PROPOSED TIMELINE OF AN IPO IN BORSA İSTANBUL... 20 7. BORSA İSTANBUL MARKET STRUCTURE AND LISTING CRITERIA... 21 7.1. Equity Market... 22 7.1.1 BIST Stars and BIST Main... 22 7.1.2 BIST Emerging Companies... 23 7.1.3 Collective and Structured Products... 24 7.1.4 Pre-Market Trading Platform... 24 7.1.5 Equity Market for Qualified Investors... 25 7.2. Debt Securities Market... 25 7.3.1 Outright Purchases and Sales Market... 25 7.3.2 Offering Market for Qualified Investors... 25 7.3.3 Repo/Reverse Repo Market... 26 7.3.4 Interbank Repo/Reverse Repo Market... 26 7.3.5 Repo Market for Specific Securities... 26 7.3.6 Equity Repo Market... 26 7.3.7 International Bonds Market... 26 8. INFORMATION LINES... 27 3

1. MAKING THE IPO DECISION There are various reasons why a company should consider an IPO. Primarily, an IPO allows companies to benefit from the financial resources of organized markets when they initiate trading on its shares. In general, benefits of an IPO could be identified under these topics: Financial Resources Liquidity Publicity Institutionalization Secondary Public Offerings Credibility - Global Exposure 1.1. Financial Resources When companies offer their shares at a premium through an IPO, they gain access to a longterm financial resource with relatively lower cost. Furthermore, companies also gain access to additional resources by issuing debt instruments and/or taking up loans by providing their shares as collateral. 1.2. Liquidity When a company offers its shares in a given organized market, where prices are settled based on the supply/demand factor, and all transactions take place transparently, their shares become highly liquid, providing substantial income opportunity for the existing shareholders. 1.3. Publicity (Domestic and Worldwide) Relevant information with regards to public companies are constantly shared with data vendors, public press, and other related parties in order to sustain market transparency and robust public disclosure. Undoubtedly, such an information exchange provides tremendous exposure for public companies, as well as their products and services. Hence, these companies have a distinct competitive advantage on both the national and global scale, when they co-operate with peer companies and create partnerships. 1.4. Institutionalization The majority of companies operating in Turkey, as well as in other emerging markets are typically family-owned businesses. Generally, the longevity of these companies is often limited with the life expectancies of their founders, thus constraining the subsistence of potential businesses. Publicly offering a company s shares is substantiated after comprehensive reviews of both the Capital Markets Board (CMB) and Borsa İstanbul. Furthermore, companies are required to allow 4

its financial statements to be audited by independent auditors periodically, inform their shareholders and the public regularly, and they are constantly reviewed by the CMB and Borsa İstanbul. By publicly offering their shares in Borsa İstanbul, and therefore constantly being reviewed by means of the auditing mechanisms of capital markets, companies accelerate their institutionalization process, which in return paves way for a professional management. 1.5. Secondary Public Offerings Inadequate capital accumulation is a negative factor, which crucially affects the economic development of many countries. In the globalized economic landscape, companies are increasingly having difficulty in accessing the financial resources necessary to sustain growth and continue their vital investments to compete with their peers. As a consequence, the significance of obtaining financial resources from the capital markets has come into prominence in recent years. Public companies -when they require supplementary financial resources to fuel their commercial activities- have the advantage of raising additional capital through secondary public offerings via limiting the preemptive purchase rights of its existing shareholders. 1.6. Credibility Companies whose shares are publicly traded in an exchange attain higher credibility before the financial institutions and the money markets; hence, they have a relative advantage in securing loans and commercial credits at lower costs. 1.7. Global Exposure Trading of their shares in an exchange also paves the way for companies to issue financial instruments and be listed in foreign exchanges, allowing them to benefit from the resources of global financial markets. 5

2. PREPERATION FOR A SUCCESSFUL IPO IN BORSA İSTANBUL In order for a company s shares to be listed in Borsa İstanbul, the prospectus detailing the offering has to be approved by the CMB and subsequently its shares has to be listed/registered with the relevant Borsa İstanbul market. Listing/registration with the Exchange denotes that the company shares are accepted for trading in the relevant market on a condition that they comply with all the requirements of that market, as well as Borsa İstanbul. Processes of preliminary preparation prior to the application of companies to our Exchange and the Capital Markets Board could be outlined under the following topics. 2.1. Constitution of an Internal IPO Task Force Since a company s shares to be publicly offered and subsequently traded in the Exchange depend on various procedures, which need to be completed internally or through external Professional assistance, it is crucial to constitute a task force within the company to handle the public offering application. Ideally, such a task force should be comprised from finance and public relations experts, as well as, mid-level management from relevant departments of the company. In order to ensure a smooth application process, this task force has to itemize each and every procedure, prior to officially applying before the CMB and Borsa İstanbul. 2.2. Selection of the Intermediary Institution In order for a company s shares to be offered publicly, the applicant company has to enter into an agreement with a brokerage/investment house. However, the brokerage/investment house selected by the applicant company is required to be recognized by the CMB. The list of approved brokerage/investment houses could be found at the Borsa İstanbul website 1. A company may either choose to sign an agreement with only one brokerage/investment house or largely depending on the size of the IPO opt for a consortium to take advantage of the syndicated efforts of several brokerage houses. In a consortium, at least one of the brokerage houses has to be identified as the leader of the consortium. The agreement between a company and brokerage/investment house(s) typically includes the rights and responsibilities of parties, whether or not there will be an undertaking option and how it will be carried out, as well as, the IPO method and other relevant fundamentals. According to the related Communiqué (No: VII-128.4), if the applicant company is of foreign origin, the brokerage house that undertakes the IPO has to be recognized by the CMB with an extensive authority. 1 http://www.borsaistanbul.com/en/members/members-list 6

2.3. Selection of the IPO Method In an IPO, brokerage/investment houses employ either of the following methods: Best Effort Broker Undertaking Undertaking of the remaining balance Undertaking of the entire balance Partially undertaking of the remaining balance Partially undertaking of the entire balance In addition, to be in compliance with the related CMB communiqué (No: VII-128.1), a brokerage/investment house has to assure that it will undertake: The entire unsold amount, if the market value of the shares offered is below 20.000.000 TL, The entire unsold amount up to 20.000.000 TL, and half of the remaining unsold amount, if the market value of shares offered is between 20.000.000 TL and 40.000.000 TL assessed using the initial public offer price. 2.4. Preparation of Financial Statements and the Selection of an Independent Auditor All companies applying for an IPO are required to prepare their financial statements in accordance with the capital markets regulations and have these statements audited by an independent audit firm. Therefore, an applicant company is required to select an independent audit firm and sign an audit contract. According to the related Communiqué (No: VII-128.4), if the applicant company is of foreign origin, financial statements of the company prepared based on the IFRS, has to be in Turkish. Generally, the intermediary institution that represents the foreign company assists in the translation of the financial statements. 2.5. Ordinance of the General Assembly and the Amendment of the Articles of Association Upon deciding on an IPO, a company should make amendments on its Articles of Association document in order to comply with the capital markets regulations, and submit these proforma amendments to the CMB. If there are any clauses in the Articles of Association that limit the circulation and transfer of the shares to be traded in the Exchange, and/or prevent shareholders from exercising their rights, they should be removed. The company has to ensure that each clause in the Articles of Association document is in compliance with the capital markets regulations. In the case that an IPO will be commenced via an increase in capital, the General 7

Assembly of the company has to ratify a decision stating the company will increase its capital and limit the pre-emptive purchase rights of its existing shareholders via an ordinance in order to comply with the Turkish Commercial Code. 2.6. IPO Price Determination Price-setting process is considered to be a crucial stage in an IPO application. The IPO price is not only dependent with the internal dynamics of the company, but it is also affected by external conditions, often uncontrolled by the company. Establishing a realistic offer price highly correlates with the success of the IPO, as well as the post-ipo stock performance. The offer price is determined by the brokerage/investment houses and therefore neither Borsa İstanbul nor the CMB intervene in this process. In the case the offer price established is higher than either of the estimated price of Borsa İstanbul and the nominal value of the shares, a price evaluation report prepared by the active brokerage/investment house, which includes the price and the calculation methodologies allocated in determining it has to be published in the Public disclosure Platform (PDP) website 2 at least three days before the inception date of the public offering. This report could be examined by other brokerage/investment houses and their findings/analyses could also be published at the PDP website. 2.7. Preparation of Documents Required in the Application The applicant company and/or the brokerage/investment house commissioned by the company are expected to begin deliberating with the relevant authorities of Borsa İstanbul and the CMB in the preliminary phases of the IPO process. All the documents required by the Exchange are itemized in the relevant clause of Borsa İstanbul Listing regulations (Clause No: IX), which could be viewed at the Borsa İstanbul website s Products and Markets Section 3. Although the documents requested are asked, and therefore submitted, within a general framework, supplementary documentation could be requested from the applicant company, depending on its business activities and industry. All pertinent documents submitted have to be furnished with the official stamp/seal of the issuing entity. 2 http://kap.gov.tr/en/home.aspx 3 http://www.borsaistanbul.com/en/products-and-markets 8

3. COSTS ASSOCIATED WITH AN IPO IN BORSA İSTANBUL Borsa İstanbul offers relatively lower costs for companies considering and IPO or SPO of their shares and/or debt instruments. Costs related with a public offering in Borsa İstanbul including brokerage firm independent audit, legal counseling services, the Capital Markets Board (CMB) fees and Central Depository Agency fees are remarkably lower than other exchanges with similar size and liquidity. As an additional incentive to attract foreign listings, Borsa İstanbul updated the Listing Fees Schedule on February 5, 2015. According to the new schedule the initial IPO listing fees were waived for all IPOs and a 50% discount was introduced annual listing fees valid only for foreign issuers. 9

The average distribution of fees in an IPO in Borsa İstanbul equity markets is represented in the following charts: MAIN EQUITY MARKET 5% 1% 2% 4% 8% 9% EMERGING COMPANIES MARKET 79% 63% 7% 11% 2% Brokerage and IPO Consultancy Fees Independent Audit Fees Legal Consultacy Fees CMB Fees CSD (MKK) Fees Borsa İstanbul Listing Fees Other Fees (Advertisement, Promotion, Other Consultancy Services etc.) 0.38% 0.34% 0.15% 3.1. Breakdown of Costs in the Public Offering of Shares The breakdown of costs incurred during the public offering shares could be categorized under five headings. 3.1.1. Fees Paid to Investment/Brokerage House(s) Issuers pay a fee to the investment/brokerage house, and if the brokerage is carried out as a consorted effort, fees are also paid to the consortium member investment/brokerage houses. This fee is calculated over the aggregate value of the offering, based on differing margins depending on the offering size and the type of services rendered by the investment/brokerage house(s). 10

3.1.2. Fees Paid to the CMB Issuers are required to deposit the CMB fee to the designated bank account, before the delivery of the CMB s approval of the prospectus is completed. This fee is calculated at 2/1000 (two in a thousand) over the offering value, and may not be less than the nominal value of the issued shares. During an IPO however, this fee is calculated at 1/1000 (one in a thousand) for the difference between the offering price and the nominal value of the shares. Likewise, in an IPO, an application fee is collected by the CMB for the portion of shares that will not be offered to the public. This fee is calculated at 2/1000 (two in a thousand) over the nominal value of these shares. However, for companies applying to the Emerging Companies Market, the CMB applies only 1/10th of the fee applied to equity listings. According to the Article 20 of the related Communiqué (No: VII-128.4), the CMB may also collect an additional quarterly fee from the foreign companies depending on the circulation level of the shares, which will be calculated as follows: If the quantity of foreign capital market instruments/depository receipts on the maximum circulation day is greater than the quantity for which the CMB fee has been paid on the basis of issue value, a fee equal to the product of the difference and adjusted sales price should be paid to the CMB by the foreign company/depository institution. 3.1.3. Fees Paid to Borsa İstanbul Listing and application fees are collected from the issuer companies, whose shares are traded at the Borsa İstanbul Equity Market. On February 5, 2015, Borsa İstanbul introduced listing fee discounts for foreign issuances. 3.1.3.1. Initial Listing Fee According to the Listing Fees Schedule updated on February 5, 2015, the initial listing fees were removed for equity issuances. 3.1.3.2. Application Fee Application fees for each market and/or application types could be viewed in the table below: Borsa İstanbul Equity Market Fee for Application of Trading Equity Market Application of Trading Fee* BIST Emerging Companies Application of Trading Fee Market Switching Application Fee (*) Excludes BIST Emerging Companies 10.000 TL 2.500 TL 7.500 TL 11

3.1.3.3. Annual Listing Fee The annual listing fee applied to Equity Market (Except BIST Emerging Companies) issuances is calculated by aggregating: one basis point (0.01%) over the nominal value of the issuers capital half basis point (0.005%) over the annual average of the total market capitalization components based on end-of-may figures of the respective year, and the fee amount may not be less than 5.000 TL or more than 1.000.000 TL. The annual listing fee for BIST Emerging is also calculated by aggregating: one basis point (0.01%) over the nominal value of the outstanding shares listed on the BIST Emerging Companies directory half basis point (0.005%) over the annual average of the total market capitalization components based on end-of-may figures of the respective year, and the fee amount may not exceed 50.000 TL. No annual listing fee is incurred in the initial listing year. A 50% discount is applied to the above mentioned annual listing fees for foreign issuers. 3.1.4. Fees Paid to the Central Securities Depository (CSD) The CSD collects a membership admission fee from the publicly offered companies, which is calculated as 1/1000 (one in a thousand) of the paid capital (this fee cannot be less than 2.000 TL and more than 50.000 TL). 3.1.5. Other Costs In addition to the above, costs such as the fees paid to the independent auditors to prepare their independent audit reports and the expenses of advertising/promotion efforts on an international and/or domestic scale should be factored in when considering the total cost of a public offering. 3.2. Breakdown of Costs in the Public Offering of Debt Instruments The breakdown of costs incurred during the debt instruments/lease certificates issuances could be categorized under five headings. 3.2.1 Fees Paid to Investment/Brokerage House(s) This fee is calculated over the aggregate value of the offering, based on differing margins depending on the offering size and the type of services rendered by the investment/brokerage house(s). 12

3.2.2 Fees Paid to the CMB Issuers are required to pay the following fees to the CMB: 0.05% of issue value for debt instruments with a maturity date up to 179 days 0.07% of issue value for debt instruments with a maturity date between 180-364 days 0.1% of issue value for debt instruments with a maturity date between 365-730 days 0.2% of issue value for debt instruments with a maturity date over 730 days 3.2.3 Fees Paid to Borsa İstanbul Borsa İstanbul collects listing fees from the issuer companies, whose debt instruments/lease certificates are traded at the Borsa İstanbul Debt Securities Market. 3.2.3.1. Initial Listing Fee Borsa İstanbul collects an initial listing fee from debt instruments/lease certificates issuers. This fee is calculated separately for publicly offered issuances and the issuances offered directly to qualified investors. The initial listing fees could be viewed in the table below: For Publicly Offered Debt Securities/Lease Certificates Issuances Aggregate Issuance Amount Range (in nominal TL) Minimum Maximum (included) Fee (TL) 0 50.000.000 3.125 50.000.000 100.000.000 6.250 100.000.000 200.000.000 12.500 200.000.000 400.000.000 25.000 400.000.000 50.000 For Debt Securities/Lease Certificates Issuances Offered to Qualified Investors Aggregate Issuance Amount Range (in nominal TL) Minimum Maximum (included) Fee (TL) 0 25.000.000 3.125 25.000.000 50.000.000 6.250 50.000.000 100.000.000 12.500 100.000.000 200.000.000 25.000 200.000.000 50.000 A 50% discount is applied to the above mentioned initial listing fees for domestic issuers, who apply for dual listing of their foreign-listed debt securities/lease certificates and this fee may not be more than 15.000 TL. 13

A 50% discount is applied to the above mentioned initial listing fees for foreign issuers, who issue debt securities/lease certificates via a direct or dual listing, and this fee may not be more than 7.500 TL. No initial listing fees are incurred for international financial institutions, foreign governments and central banks. 3.2.3.2. Annual Listing Fee A fixed annual listing fee is applied in the amount of 500 TL for each listed debt securities/lease certificates. However, for debt securities/lease certificates with a maturity dates longer than three years, this fee will be waived after the initial threeyear period. Similar with the Equity Market issuances, no annual listing fee is incurred in the initial listing year for debt securities/lease certificates. A 50% discount is applied to the above mentioned annual listing fees for domestic issuers, who apply for dual listing of their foreign-listed debt securities/lease certificates. A 50% discount is applied to the above mentioned annual listing fees for foreign issuers, who issue debt securities/lease certificates via a direct or dual listing. No annual listing fees are incurred for international financial institutions, foreign governments and central banks. 3.2.3.3. Fees Paid to the Central Securities Depository (CSD) The CSD collects a fee from the publicly offered companies, which is calculated as 0.01% of issue value (fees to be paid to CRA cannot exceed 1,500 TL per ISIN) 3.2.3.4. Fees Paid to the Settlement and Custody (Takasbank) Takasbank collects a fee of 200 USD per ISIN. 3.2.3.5. Other Costs In addition to the above, costs such as the fees paid to the independent auditors to prepare independent audit reports and the expenses of advertising/promotion efforts on an international and/or domestic scale should be factored in when considering the total cost of a public offering. 3.3. Breakdown of Costs in Warrants and Certificates The initial listing fee is TL 500 per issue. For each issuer, total listing fee cannot exceed 125,000 TL in a year. There is no annual listing fee for warrants and certificates. The CMB registration and CRA membership fees are the same as in the Debt Securities Market. 14

4. ADDITIONAL CONSIDERATIONS FOR FOREIGN IPO CANDIDATES According to the Communiqué on Foreign Capital market Instruments, Depositary receipts and Foreign Investment Funds (No: VII-128.4), if the applicant company is of foreign origin, the brokerage house that undertakes the IPO has to be recognized by the CMB with an extensive authority, which translates to an intermediary institution capable of mediating the widest array of capital market instrument issuances. Currently, any intermediary institution capable of undertaking an IPO application is authorized under the CMB guidelines. For the most updated list, please visit the CMB website s Institutions section. According to the related Communiqué (No: VII-128.4), if the applicant company is of foreign origin, financial statements of the company prepared based on IFRS, has to be in Turkish or accompanied by a certified Turkish translation. Generally, the intermediary institution that represents the foreign company assists in the translation of the financial statements. Also, the quarterly financial statements that are required to be disclosed regularly at the Public Disclosure Platform website 4 have to be in Turkish. During an IPO of a foreign company, the prospectus has to be in Turkish language as well. The intermediary institution(s) assigned to the IPO mediation will most likely assist the applicant company in the translations, if the original language of the prospectus is other than Turkish. 4 http://kap.gov.tr/en/home.aspx 15

5. SEVEN STEPS OF AN IPO APPLICATION IN BORSA İSTANBUL Below steps outline the public offering procedures for companies that have not been listed/publicly offered elsewhere. They also apply for non-public foreign companies. 1 2 3 4 5 6 7 Applications to Borsa İstanbul and the CMB Investigation of the Company by the CMB and Borsa İstanbul Experts Applications to Takasbank and CSD Designation of the Trading Market Approval of the Prospectus Public Offering and Reporting the Sales Results Listing and the Inception of Trading in the Exchange 5.1. Applications to Borsa İstanbul and the CMB An IPO candidate company should apply to the CMB in order to receive approval for its prospectus, and at the same time, it should apply to Borsa İstanbul to be listed in the relevant market of the Exchange. A simultaneous filing to the CMB and Borsa İstanbul is preferred, since it will significantly reduce processing times. The application could be filed by the company or on its behalf by the authorized brokerage/investment house. Furthermore, the scope of the PR efforts of the IPO campaign is expected to be defined at this step. Since PR efforts are crucial in order to attract as much investor as possible, utmost care has to be administered at this stage. These will include executive statements dwelling upon the company s intention to proceed with an IPO, and often press publishing or other visual communication methods that touch on the company s core business activities could be utilized. Moreover, depending on the target investor base and the magnitude of the IPO, an international PR campaign could be launched. 16

5.2. Investigation of the Company by the CMB and Borsa İstanbul In subsequence with the successful filing of all required documentations, experts from both the CMB and Borsa İstanbul pay a visit to the company s headquarters and production facilities to perform an on-site investigation. Although there are certain differences in these investigations based on the kind of corporation and business sector, the following matters receive high emphasis in general. 5.2.1 Qualitative Investigations The company s business operations, services provided, manufacturing process, ongoing or planned investment projects, raw material procurement efforts, sales, quality of its human resources, relations with its subsidiaries/partnerships, legal matters, licenses, know-how agreements, brands and patents held, company and industry insights, government licenses and other certifications, real estate holdings as well as leasing transactions, etc. are the subjects of qualitative investigations. 5.2.2 Quantitative Investigations The most recent and previous financial statements and their footnotes audited by the independent auditors are examined during the quantitative investigations. Furthermore, the trial balance sheet of the company, as well as its secondary books are examined, static and dynamic fiscal analyses and the analysis of the key financial ratios are performed in order to evaluate the financial well-being of the company. 5.3. Applications to Takasbank and CSD The assignment of the ISIN code (International Securities Identification Number) defined by the International Organization for Standardization (Standard no: 6166) in order to create a uniform exchange and custody process to ensure smoother transactions, is obligatory during the IPO process. Recognized by the CMB, Takasbank, the national numeration entity is the official undertaker of the ISIN assignment procedure. All the ISIN numbers are assigned by Takasbank and distributed/declared worldwide. The Articles of Association, securities and issuer information forms are to be submitted by the issuer company. In order to retrieve these forms, the issuer company has to send an email correspondence to Takasbank (international@takasbank.com.tr) stating they request the forms required to be granted the ISIN code(s) for it securities. Once completed properly, these forms and the aforementioned documents have to be submitted to Takasbank following the registration with the CMB. This fee is calculated as $200 for each ISIN code assigned per one security to be deposited. Pursuant to the CMB legislation, all issuers with registered securities are required to be the member of Central Registry Agency (CRA). Hence, all issuers, whose shares are expected to be traded in Borsa İstanbul markets, should apply to CRA for membership prior to the trading date in order to satisfy the terms of the relevant legislation. A membership is granted in subsequence 17

with the issuer s submission of the online membership application form, which could be accessed via the CRA website 5. Furthermore, membership to the Public Disclosure Platform (PDP) is obligatory for companies whose capital markets instruments are to be traded in the Exchange. PDP is an electronic platform, utilized by the traded companies to announce their material disclosures using digital signatures. Within the framework of the CMB s decision on January 14, 2014 (Decision no: 41), PDP is conveyed to the Central Registry Agency (CRA). Therefore, PDP membership applications should be submitted to the CRA, henceforward. Procedures regarding the applications could be reached via PDP website. 5.4. Designation of the Trading Market The market in which the issuer s shares will be traded are determined by the decision of the Borsa İstanbul Board after the Exchange experts complete their investigation. Information pertaining to the market of trading should be included in the IPO prospectus. Detailed information in regards to the quantitative and qualitative criteria for admission to Borsa İstanbul Equity Market could be viewed at Borsa İstanbul website s IPO section under the Listing subsection 6. 5.5. Approval of the Prospectus The CMB examines the IPO prospectus from a public disclosure standpoint and once the prospectus is seen fit for its purpose, it is approved to grant permission to the public offering. 5.6. Public Offering and Reporting the Sales Results The shares are offered to the public via an investment/brokerage house sometimes via a consortium of investment/brokerage houses- between the dates designated at the prospectus and/or the sales announcement in the case that the IPO application satisfies the requirements of the CMB regulations. Once the sales results are finalized, the investment/brokerage house published the figures at the Public Disclosure Platform and also sends the results to the CMB and Borsa İstanbul. 5.7. Listing and the Inception of Trading in the Exchange A final evaluation regarding whether the sales results satisfy the terms of the Borsa İstanbul IPO approval decision, which was rendered during the fourth IPO step and therefore disclosed in the 5 https://www.mkk.com.tr/en/ 6 http://www.borsaistanbul.com/en/companies/listing/equities/equity-market 18

prospectus is carried out by the Board of Borsa İstanbul. Subsequently, shares begin trading in the related market pending the Public Disclosure Platform announcement by Borsa İstanbul. An opening bell ceremony is held at the inception of the first trading day, should the issuer company request one. 19

6. PROPOSED TIMELINE OF AN IPO IN BORSA İSTANBUL Although there are many factors that may have an impact on the public offering timeframe such as the size of the issuer company, industry it operates and its structure, the method used and market conditions, etc. and therefore it is difficult to create a one size fit all type timetable, the below example could prove useful as a reference point. Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Application to Borsa İstanbul and the CMB 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 CMB and Borsa İstanbul audits Borsa İstanbul Board decision (regarding market determination) CMB prospectus approval Declaration of the prospectus and circulars Completion of the public offering process Reporting of sales results to the Exchange Beginning of trade for shares offered 20

7. BORSA İSTANBUL MARKET STRUCTURE AND LISTING CRITERIA There are four main markets at Borsa İstanbul and several submarkets within these main markets. Below table broadly demonstrates the market structure. 7 BORSA İSTANBUL Debt Securities Market Equity Market Precious Metals & Gems Market Derivatives Market Outright Purchases & Sales Market BIST Stars Offering Market for Qualified Investors BIST Main International Bonds Market BIST Emerging Companies Repo/Reverse Repo Market Watchlist Equity Repo Market Collective & Structured Products Repo Market for Specified Securities Pre-Market Trading Platform Interbank Repo- Reverse Repo Market Equity Market for Qualified Investors 7 Since this document is prepared as an IPO guide, detailed information about the submarkets were not included except for the Debt Securities and Equity Markets. 21

7.1. Equity Market Equities and rights coupons of companies belonging to various sectors, exchange traded funds, warrants and certificates are traded on Borsa İstanbul Equity Market. The Market offers a liquid, transparent and secure trading environment for both domestic and foreign investors. Trading in the Equity Market is carried out with continuous auction, continuous auction with market maker and single price trading methods according to price and time priority, with a fully automated electronic trading system. Trading is carried out in two sessions, one in the morning and the other in the afternoon. An opening session is held prior to each of the sessions, and a closing session is held at the end of the second session. 7.1.1 BIST Stars and BIST Main Companies that fulfill Borsa İstanbul s listing criteria are traded on BIST Stars or BIST Main depending on their market cap, offer size and capital, where BIST Stars is the market for blue chip listings and BIST Main acts as the listing venue for the small and medium-sized issues. 7.1.1.1. Listing Criteria for BIST Stars Qualitative and quantitative listing criteria for BIST Stars and BIST Main admissions are summarized in the following tables. For more details please visit the Listings Section at the Borsa İstanbul website 8. 1 2 3 4 5 6 7 QUALITATIVE CRITERIA A corporate structure compatible with the relevant legislations Minimum three years of operational track record Robust financial structure Free from significant legal disputes Free from liquidation and/or bankruptcy Articles of Association in compliance with the CMB rules Quantitative Criteria 8 http://www.borsaistanbul.com/en/companies/listing/equities/equity-market 22

Minimum Market Value of Publicly Offered Equities Positive EBITDA Minimum Total Market Capitalization Minimum Ratio of Equities Offered /Paid-in Capital Capital/Total Equity Ratio (in the last audited financials) QUANTITATIVE CRITERIA (in TL) BIST Stars BIST Main Group 1 Group 2 Group 1 Group 2 250.000.000 100.000.000 50.000.000 25.000.000 For two consecutive years For two consecutive years For two consecutive years For two consecutive years 1.000.000.000 400.000.000 - - 5% 10% 15% 25% >75% >100% >100% >125% 7.1.2 BIST Emerging Companies BIST Emerging Companies (BEC) was established as a distinct market within Borsa İstanbul to create a transparent and organized platform where the shares of earlyphase/post-start-up companies with growth and development potential could be traded to avail these companies access to capital markets. 7.1.2.1. Admission Criteria for BIST Emerging Companies Admission criteria for the BEC are summarized in the table below. Companies in the BEC could be transferred to BIST Main provided that they meet the required criteria. For more details please visit BIST Emerging Companies 9 heading at Borsa İstanbul website s Listings Section under the Equities link. 9 http://www.borsaistanbul.com/en/companies/listing/equities/emerging-companies-market 23

1 2 3 4 5 6 7 BIST EMERGING COMPANIES ADMISSION CRITERIA No quantitative criteria Should be a joint stock company IPO is allowed only via a capital increase Has to assign a "Market Advisor" valid for at least two years Inspections are conducted by the Market Advisor Independently audited year-end financial statements Semi annual financial statements (no independent audit) 7.1.3 Collective and Structured Products Certificates of investment trusts, real estate investment trusts, venture capital trusts and exchange traded funds, warrants, and certificates are traded on the Collective and Structured Products Market. For further information please visit Borsa İstanbul website s Listings Section under the Equity Market link. 7.1.3.1. Warrant and Certificates Covered warrants and certificates could be issued by investment institutions which have been assigned a long-term credit rating grade of at least A. The application to the CMB has to be made within three months starting from the date of the decision of the issuer. CMB reviews the applications according to public disclosure requirements, and registers the warrants and certificates. Underlying instruments of warrants and certificates could be Borsa İstanbul indices, single equities or an equities portfolio which is composed of stocks in the BIST 30 Index. Issuers are required to have a market maker. Warrants and certificates maturities cannot be less than two months or more than five years 10. 7.1.4 Pre-Market Trading Platform The Pre-Market Trading Platform (PTP) was created as part of Borsa İstanbul Equity Market for publicly held companies whose equities are not traded on Borsa İstanbul determined by the CMB in line with the CMB s decision no. 17/519 dated June 3, 2011. Equities traded on the PTP are subject to gross settlement, will not be grouped under A, B, or C lists, and margin trading and short selling are not allowed for such equities. 10 VII-128.3 Communiqué on Warrants and Certificates 24

7.1.5 Equity Market for Qualified Investors The shares of private companies that offer their shares only to qualified investors and the public companies whose shares are not traded in the exchange could be traded on the Equity Market for Qualified Investors (EMQI). Admissions to the EMQI are mainly evaluated based on the following criteria: 1 2 3 4 5 6 7 EMQI ADMISSION CRITERIA Issuance document should be approved by the CMB Articles of Association in compliance with the CMB rules Robust financial structure Free from significant legal disputes Free from liquidation and/or bankruptcy Positive auditor's opinion for the last financial statements Borsa İstanbul Board approval 7.2. Debt Securities Market Summary information in regards to the submarkets of the Debt Securities Market is provided below. For further details please visit the Debt Securities Market 11 heading at Borsa İstanbul website s Products and Markets Section under the Markets link. 7.3.1 Outright Purchases and Sales Market Fixed income securities are traded on the Outright Purchases and Sales Market, which is an organized and transparent secondary market. Accordingly, debt securities, securitized asset and income backed debt securities, lease certificates, liquidity bills issued by the Central Bank of the Republic of Turkey and other securities which are approved by Borsa İstanbul Board, all of which can be issued in Turkish Lira (TL) or foreign currency are traded. 7.3.2 Offering Market for Qualified Investors The Offering Market for Qualified Investors is the market where the debt securities of the issuers are issued to qualified investors as defined in the relevant capital markets legislation 12, in accordance with the regulations of the CMB. 11 http://www.borsaistanbul.com/en/products-and-markets/markets/debt-securities-market 12 II-5.2 Communique on the Sales of Capital Market Instruments 25

7.3.3 Repo/Reverse Repo Market Fixed income securities are sold with a re-purchase agreement (repo) and are bought with a re-sale agreement (reverse repo) in the Repo-Reverse Repo Market, which is one of the leading organized repo markets in the world. 7.3.4 Interbank Repo/Reverse Repo Market The Interbank Repo-Reverse Repo Market was established to facilitate the repo-reverse repo transactions in organized market conditions, without having to meet the reserve requirement of the Central Bank, which is applied when a bank carries out repo transactions with a non-bank party. 7.3.5 Repo Market for Specific Securities Repo Market for Specific Securities provides the opportunity to realize repo transactions on specified debt securities within the organized market and then to deliver such securities to the buyer. It provides the means to exchange the security in a specified period, ensuring the flow of the securities between the forward and spot markets. 7.3.6 Equity Repo Market Equity Repo Market provides a means for carrying out repo transactions on company shares within an organized market framework. Shares acquired through repo transactions are delivered to the buyer for the duration of the contract. 7.3.7 International Bonds Market Foreign Debt Securities ( Eurobonds ) issued by the Turkish Undersecretariat of Treasury and listed by Borsa İstanbul are traded in the International Bonds Market. 26

8. INFORMATION LINES If you or your company has a question regarding public offerings, listing and trading in Borsa İstanbul, please do not hesitate to contact the Listingİstanbul Team. TEL : +90 (212) 298 21 00 FAX : +90 (212) 298 25 00 Borsa İstanbul Marketing and Sales Department TEL : +90 (212) 298 22 39-298 21 30-298 26 94 FAX : +90 (212) 298 25 00 E-MAIL ADDRESS : listingistanbul@borsaistanbul.com : Reşitpaşa Mah. Tuncay Artun Cd. Emirgan 34467 İstanbul/TURKEY www.listingistanbul.com 27