Iran's Pasargad Group Weighs $330 Million IPO of Energy Unitby
Share sale could take place in Iranian year ending March 2017
Financial group also seeking to create international network
Pasargad Financial Group, owner of Iran’s second-largest bank, is weighing the sale of shares in its energy unit as the removal of sanctions boosts confidence in the economy.
“We’ll likely IPO some of our companies this year, like PEDC,” Majid Ghassemi, chairman of Pasargad Energy Development Co. and CEO of Pasargad Bank, said in an interview in Zurich, Switzerland, where he was attending a conference on investing in Iran. The IPO could take place in the current Iranian year, which ends March 2017, “or latest, next Iranian year,” he said, adding the listing may raise about 10 trillion rials, or $330 million, through a sale on the Fara Bourse -- Iran’s junior market.
PEDC is involved in oil and gas exploration as well as refining. The company is working on approximately $12 billion of energy projects, including the construction of a $2.2 billion gas line to neighboring Iraq, Ghassemi said.
Iran, the second-largest economy in the Middle East, is now able to boost oil exports and reconnect its banks to the global financial system after a decade of economic and political isolation. Foreign companies and investors are scoping the market of 78 million people for opportunities after the lifting of sanctions in January. Since then stock market has increased by around 30 percent.
“Investors became more optimistic and invested heavily in the market, which usually is a good indicator for the IPO market,” said Mo Nikjoo, head of the M&A group at Amin Investment Bank, the largest institution of its kind in Iran. The “very high cost of debt makes it interesting for companies to raise capital through IPO.”
In addition, most “IPOs were successful in Iran as they are priced significantly below their real value,” Nikjoo said. “New foreign investors who want to invest in Iran’s public market would also make the IPO market more attractive.” The market is awaiting a backlog of potential IPO candidates after a “very bad market” in the last couple of years, he said.
The group may also sell some of the shares of companies under its Middle East Mines Industries Development Holding Co., Ghassemi said. It still needs to get licenses for the listing of its companies on the Tehran stock exchange, he said.
Pasargad, one of 19 privately-owned banks in Iran, increased assets by 14 percent in 2015 to 505 trillion rials ($16.6 billion). The lender is seeking to become a “global bank” and create an international network by opening new branches, initiating joint ventures with local lenders and through acquisitions, Ghassemi said. Europe is the priority and the bank is considering the U.K., France, Switzerland and Spain, he added.
“We’ll focus on whichever country can answer our needs,” Ghassemi said.