In a landmark deal, the European Bank for Reconstruction and Development (EBRD) announced on Friday that the bank is starting exclusive talks to acquire a 10 percent stake in Borsa Istanbul. "Borsa Istanbul is at the heart of Turkey's ambition to become a financial center for the wider region. As a shareholder in Borsa Istanbul, we will support its efforts to become a leading stock exchange in terms of the number of listed companies and market capitalization, reflecting Turkey's economic potential," said EBRD First Vice President Phil Bennett. Borsa Istanbul Chairman Talat Ulussever, Borsa Istanbul CEO Tuncay Dinç and Bennett along with EBRD director for Insurance and Financial Services, Noel Edison, signed a term sheet in Istanbul on Friday, paving the way for a pre-initial public offering (IPO) investment at Borsa Istanbul.Borsa Istanbul's CEO Tuncay Dinç stated that as a founding member of the EBRD, Turkey will benefit from the Bank's direct investment in Borsa Istanbul. "This long-term pre-IPO investment is yet another indication of the great potential of Turkish capital markets and Borsa Istanbul. We consider this strategic partnership to be another important milestone on the road to making İstanbul an international financial hub," said Dinç.Speaking to Daily Sabah, economist Taha Meli Arvas said the mandate of the ERBD, run primarily by the U.S. and its NATO allies, was really to act as a counterweight to Russian influence post-Cold War and it still serves that purpose. "The EBRD's decision to invest in the BIST exchange is great news for both institutions. This investment highlights the strategic importance that the U.S. and its fellow owners of the ERBD place on Turkey. A strong and vibrant Turkey is essential to the well-being of European and U.S. interests in the region and this ERBD investment is just the latest in many investments the West is making in Turkey," Arvas said, and noted that more important than the actual investment, added cooperation between the countries will be a win-win for everyone.Noel Edison, Director for Insurance and Financial Services at the EBRD, added: "This investment is part of the EBRD's long-term strategy in Turkey to help the country deepen its capital markets. We will work to improve the efficiency and liquidity of the exchange to make it more attractive to domestic companies and foreign investors and will also help with the preparations for a successful public listing."Borsa Istanbul, majority-owned by the Turkish government, is the sole exchange entity in Turkey, created in 2013 by combining the Istanbul Stock Exchange, the Istanbul Gold Exchange and the Turkish Derivatives Exchange.Expected to take place next year, the IPO is part of the government's comprehensive plan to reshape Turkey's capital markets and turn the country into a financial hub for the region spanning Central Asia, southeastern Europe and North Africa. Previously, the EBRD undertook a pre-IPO investment in the Moscow Exchange and invested in the Bucharest Stock Exchange. The Bank is also supporting an order-routing system established by the Bulgarian, FYR Macedonian and Zagreb stock exchanges and aimed at increasing liquidity and advancing standardization among the connected exchanges.