Subscription for units of an exchange-traded fund that holds government stakes in four refineries will commence on Wednesday, head of the Iranian Privation Organization said.
“IPO has received the permit for launching the ETF and its ticker symbol was registered at the Tehran Stock Exchange today (Saturday),” Alireza Saleh said.
The assets include the government’s remaining stakes in four major oil refining companies, namely Tehran Oil Refining Company, Esfahan Oil Refining Company, Tabriz Oil Refining Company and Bandar Abbas Oil Refining Company. The government owns 20% of shares in each refinery.
The new ETF is the second of its kind. In May the government sold shares in three banks and two insurance companies via an ETF and made 58.86 trillion rials ($260 million).
It has increased the ceiling for purchasing refinery ETF units – one can buy units worth up to 50 million rials. Earlier the cap was put at 20 million rials.
Assets include government stakes in four major oil refining companies, namely Tehran Oil Refining Company, Esfahan Oil Refining Company, Tabriz Oil Refining Company and Bandar Abbas Oil Refining Company
As per rules, ETF units are on offer for two weeks and people can buy using their national ID cards as trading codes.
The government has reportedly considered incentives for investment in state-controlled ETFs to encourage more people to get involved. A 20% discount on prices is in the works.
Earlier it was announced that prices would be based on the average final price of shares displayed on TSE’s bulletin board for one month to the day prior to the subscription date. However, unofficial reports say the government may change the pricing mechanism because share prices plunged in the past week.
“The Cabinet is reviewing the pricing method for ETF units,” Securities and Exchange News Agency quoted the CEO of Securities and Exchange Organization Hassan Qalibaf- Asl as saying. He did not elaborate.
Mutually Beneficial
Officials say offering shares via ETFs is advantageous both for the government and buyers as it helps the former raise funds by selling assets to the private sector and provides investment opportunity to large numbers of people with small savings.
Selling shares via ETFs is part of the government’s effort to raise funds for deficit spending. In April the government had said it would cede shares in three phases via ETFs.
The first phase commenced on May 3 with 17% of government stakes in Tejarat Bank, 17% in Bank Mellat, 18.32% in Bank Saderat Iran, 17.34% in Alborz Insurance Company and 11.44% in Amin Reinsurance Company on offer dubbed the ‘First Financial Intermediary’.
Refinery shares will be offered as part of the second phase.
In the third and final phase shares in giant auto and metal companies will be sold. The third fund is expected to hold 12.05% of government stakes in the National Iranian Copper Industry Company, 17.2% in Mobarakeh Steel Company, and lastly 14.04% in Iran Khodro and 23% in SAIPA (the two main domestic carmakers).
