Persian Gulf Petrochemical Industries Company is to set up an investment bank and has issued a subscription notice to sell shares before an initial public offering.
Iran Fara Bourse website said investors can subscribe for shares of the Persian Gulf Investment Bank from Saturday. The subscription phase will last for one month.
Subscription of stocks refers to newly issued securities that an investor has agreed to buy prior to the official issue date. When investors subscribe they expect to own the nominated shares once the offering is complete. Investors may subscribe to a company's IPO before knowing the actual IPO price on the first day of trading.
The bank will have an initial nominal capital of 5 trillion rials ($18 million), 2 trillion rials ($7.4m) of which would be secured via subscription. Investors can subscribe for 2 billion shares at 1,000 rials per share. Each retail or institutional trader can purchase a maximum 40,000 shares.
The PGPIC received the go-ahead from the High Council of Securities and Exchange, the stock market policymaker, to set up the bank in July.
The significance of the decision is that investment banks were so far the exclusive premise of banks and investment companies.
“The bourse council in fact broke the monopoly over investment banks by the banking industry and has allowed big industrial companies to secure funds via investment banks,” Jafar Rabi’ei, managing director of the giant petrochemical holding was quoted as saying by the PGPIC website.
Investment banks are best known for their work as intermediaries between a corporation and financial markets. They help corporations issue shares via IPOs or additional stock offers. They also arrange debt financing for corporations by finding big investors for corporate bonds.
PGPIC is the biggest consortium of Iranian petrochemical producers. With a market capitalization of 3,550 trillion rials ($13 billion), it is the largest company listed on the Tehran Stock Exchange and the second largest petrochemical company in the Middle East with 60 plus subsidiaries.
The IFB will host another share subscription on Saturday for a reinsurance company Avayeh Pars Reinsurance Company. The company is to be set up with the nominal capital of 5 trillion rials divided into 5 million shares each priced at 1,000 rials.
Founders of the company have put up 70% of the capital and the rest is expected to be procured via subscription.
