# IPO Review

In this review, we will look beyond the standard IPO details to examine the company’s ownership structure, use of proceeds, debt levels, operational strength, and growth potential from an investor’s perspective. The company’s financial data and the background of its ownership structure offer critical clues about what lies between the lines of this public offering.

## IPO Structure and Share Sale

The fact that the entire IPO will be conducted through a **capital increase** is a refreshing development that we haven’t seen in the market for a long time, making a positive first impression. However, looking at the flip side of the coin—specifically the company’s discount and free float ratios—raises some red flags. I can’t help but ask: *“Are they keeping the free float ratio this high because they are buried in debt and desperately need the cash?”*

On the price stabilization front, allocating 10% of the gross IPO proceeds for 30 days might not amount to a massive sum, but it can still be considered a plus for short-term investors looking to ride the initial wave of limit-up streaks.

## Use of Proceeds and Cash Requirements

Looking at the use of proceeds report, the company states that the entire influx of capital will be directed toward investments. About 30% of these funds are allocated to expanding retail stores. In terms of substance and returns, this is an area where we can calculate tangible value—much like traditional, brick-and-mortar factories.

On the other hand, the 10% allocated to branding and 60% dedicated to collection/design investments are areas that are notoriously difficult to value. They also introduce a lot of uncertainty for an investor whose personal consumption habits are far removed from this sector. In cases like this, you either have to put in serious hours to understand the industry inside out, or simply manage your risk by staying away.

## Operational Structure and Growth Potential

The company operates in two sectors that I find rather unappealing under current domestic market dynamics for the short-to-medium term: **apparel** and **renewable energy**. Looking at the domestic market since 2024, even the top-tier companies have struggled to grow, essentially just running in place. This sectoral stagnation immediately puts the company at a disadvantage in my book.

When evaluating the revenue mix, we see that **97%** of the turnover comes from apparel operations. The renewable energy segment—consisting of 4 solar power plant (SPP) projects with a 15 MW installed capacity—accounts for a mere 3% of total revenue. Therefore, labeling this as an energy company would be highly misleading. Had the company positioned its renewable energy investments as *“we completely cover our own energy consumption from these sources and pursue a net-zero carbon policy,”* it would have caught my attention much more as an investor.

## Indebtedness, Receivables, and Cash Cycle

Examining the financials and debt profile raises serious doubts about how this operational setup can generate healthy cash flow. There is a glaring contradiction between management’s decision to channel all IPO proceeds into new investments and the company’s current debt structure. Total debt stands at **1.366 billion TL**. Looking at the financial performance indicators, the breakdown is as follows:

* 2024: Operating profit was 488 million TL, while financing expenses reached 441 million TL.

* 2025: Operating profit was 904 million TL, while financing expenses reached 661 million TL.

These figures clearly demonstrate how heavily financing costs are eating into operating profits. Had management decided to use the fresh cash from the IPO to pay down debt, it would have immediately boosted the net profit line. Instead, they chose expansion. They likely anticipate that these investments will capture new market share and aggressively drive revenue growth. While this scenario looks like an intriguing contrarian investment opportunity on paper, taking such a risk on a newly listed company that has yet to prove itself doesn’t seem reasonable to me.

## Ownership Structure and Past Track Record

I was planning to dive deeper into the store network, upcoming locations, or export potential, but a specific detail in the ownership structure made that unnecessary. The company is built on a typical, patron-controlled structure frequently seen on the stock exchange. Derlüks Yatırım Holding A.Ş., which is publicly traded, holds 68.69% of the shares, while the remaining shares are held by Cemal Güzelci.

Looking closely at Derlüks Yatırım Holding’s own structure, 59.95% is publicly traded, and the remaining 40.05% also belongs to Cemal Güzelci. Ultimately, the company is completely controlled by a single individual.

The real dealbreaker that made me stop researching this company altogether was the historical capital movements of the parent company, Derlüks Yatırım Holding A.Ş. Taking a look at the holding company’s track record:

* 2019: Went public (IPO),

* 2020: Executed a private placement,

* 2022: Executed two consecutive private placements,

* 2023: Conducted a 100% rights issue,

* 2024: Executed another private placement.

In short, its brief history since going public is filled with the majority owner continuously offloading shares into the market and frequently resorting to private placements and rights offerings. In my eyes, this track record casts a shadow over the company’s credibility and long-term sustainability, giving me no reason to take this review any further.

## Overall Assessment

While the fact that all IPO proceeds remain within the company as a capital increase looks good on paper, the high free float ratio and the heavy pressure of financing expenses on profitability pose severe risks. The current contraction of its primary sectors in the domestic market, and more importantly, the principal shareholder’s history of aggressive rights issues and private placements in their other listed company, leave a negative impression. As an investment alternative, I believe the risks far outweigh the opportunities, and I choose to steer clear of this IPO.

LEGAL DISCLAIMER: This content does not constitute investment advisory services. Investment advisory is a personalized service tailored to an individual’s risk-return profile, financial situation, and investment goals. The information, comments, and evaluations contained herein are prepared solely for general informational purposes and do not in any way constitute guidance for investment decisions. This content may not be suitable for the reader’s financial structure and risk-return preferences; therefore, investing based solely on this information may not yield the expected results.