The government divested shares worth 272 trillion rials ($1.2 billion) in 16 state-owned companies in one year ending August 2019, the Iranian Privatization Organization said a report.
According to the report seen on IPO’s website, the shares were sold exclusively through the stock market “in a competitive environment”.
The IPO said the divested amount totaled 16% of all divested government stakes since IPO’s inception in 2001. A variety of methods were used for the divestment, namely block sale, retail sale and offering shares via exchange-traded funds.
The government sold stakes in two companies in blocks worth 29 trillion rials ($126 million). The IPO did not mention the name of companies, but it appears that the block sale refers to stakes in two refineries in February, namely Shiraz Oil Refining Company and Lavan Oil Refining Company.
In addition, stakes in 15 listed companies worth 125 trillion rials ($540m) were sold as retail shares. The government divested shares in several companies in lieu of its mounting debts to the Social Security Organization. Stakes in these companies were valued at 62 trillion rials ($270m).
SSO is the biggest insurance company in Iran that offers insurance cover and pension to non-state workers and voluntary coverage to the self-employed.
The government also offered shares in three banks and two insurance companies via an ETF. Earlier reports said 56 trillion rials ($243m) of the shares were sold to 3.5 million buyers.
Divesting government assets is in line with amendments to Article 44 of the Islamic Republic Constitution that requires the government to downsize and accelerate its privatization projects.
Justice Shares
IPO referred to the government ceding shares to the public and regulating trade of the so-called ‘Justice Shares’ as "major achievements” in the past year.
In April the Rouhani administration eased restrictions on trading Justice Shares, allowing shareholders to sell a portion of the shares in the stock market.
Justice Shares are shares of government-owned companies given free to the six lowest income deciles in 2005. The shares until recently were not tradable and negligible dividends were paid in the last two years.
“The scheme is in the interest of shareholders as it enables them to sell their shares directly via the bourse,” the IPO said.
An estimated 50 million Iranians own Justice Shares and unconfirmed reports say the total value of the shares is 3,000 trillion rails ($13b).
The Justice Share portfolio includes 49 state-owned companies in the auto, metal, mining, agriculture, petrochemical and banking sectors. Of these companies 35 are already listed with the stock market and 14 are planning an initial public offering.
Justice Share scheme is traced back to 2007, when the
When former president Mahmoud Ahmadinejad decided to speed up the privatization process his government offered the shares in 2007 to low-income households.
More to Come
Outlining its future plan of action, the IPO said 11 government-owned companies are scheduled to be listed in the stock market.
There also are plans to set up three specialized power plant holding companies and offer government shares in 23 electricity companies via the share market.
The government intends to sell shares in four refineries via another ETF. The ETF holds 20% of government stakes in Tehran Oil Refining Company, Esfahan Oil Refining Company, Tabriz Oil Refining Company and Bandar Abbas Oil Refining Company. Value of the shares is estimated at 600 trillion rials ($2.6b).
Plans also include the launching of a third ETF in the last quarter of the current fiscal year (January-March 2020). This ETF will reportedly offer 12.05% of government stakes in the National Iranian Copper Industry Company, 17.2% in Mobarakeh Steel Company and 14.04% in Iran Khodro and 23% in SAIPA (two main domestic carmakers).
