Page 44 - IRANRptSep20

All shares in Iran’s biggest ever IPO snapped up
Each salaf contract was to have an equivalent value of one barrel of heavy crude oil priced at 9.446mn rial (around $224 at the official rate) in Iran. Under a salaf contract, the full price of the contract must be paid in advance.
Iran’s largest-ever initial public offering (IPO) occurred on April 15 with the government floating a 10% stake in the Social Security Investment Company (SHASTA) on the Tehran Stock Exchange (TSE).
The entire stake of 80bn shares was sold at Iranian rial (IRR) 8,600 per share, with the flotation estimated to have earned IRR68.8tn ($430mn at the free market rate, $1.63bn at the government rate).
Private investors who snapped up some of SHASTA at the TSE—lately moved to a brand new building in the north of Tehran—now own part of an organisation that is home to large swathes of Iran’s insurance market and pension portfolios.
Shasta controls nine entities in sectors including petrochemicals, pharmaceuticals, petroleum, transportation, cement and finance. Its controlled companies include Iranian shipping line IRISL, National Iranian Copper Industries (NICICO), Mobarakeh Steel, Iranol Oil and Jam Petrochemical Co. Iranian President Hassan Rouhani hailed the IPO as historical, saying around 2mn investors benefited from the stock market sale.
The listing has spurred new interest in the Iranian stock market, which has made gains of more than 200% in the past year. It has seen significant gains in recent months with people searching for safe havens in which to invest funds—investors are looking to escape the huge depreciation that has undermined the rial since the US introduced heavy sanctions against Tehran nearly two years ago and are now also wary of sectors of an economy rocked not just by sanctions but by the coronavirus (COVID-19) health and economic emergency.
The SHASTA sale is likely to kickstart efforts of other state-owned enterprises to offload shares in their businesses. The Islamic Revolutionary Guard Corps (IRGC), which has massive holdings in swathes of the economy, might be tempted into the market in a significant way.
Mahdi Seifollahi, global market development manager at Mofid Securities in Tehran, spoke with ​bne IntelliNews​ about the IPO and his thoughts on the country’s stock market moving forward.
"The government has already announced its intention to sell some government-owned shares in 1399 [the 2020/2021 Persian calendar year that started on March 20]. It is basically due to its privatisation plan. Other companies are set to come on to the market if the government recognises the SHASTA IPO as a success," Seifollahi said
"Also, it [an IPO] absorbs some of the liquidity in the market at no extra cost. SHASTA is almost the last company in this government tree to go public. Only two companies are remaining. The government doesn't lose control over these companies when they go public. It is just one way to absorb money from society," he added.
44​ IRAN Country Report September 2020 www.intellinews.com