Iran’s capital market now finances almost 25% of the economic sector, CEO of Tehran Stock Exchange (TSE) said.
“This share was a meager 5% in 2011-12 while banks accounted for 95%. The increased interaction of the capital market and businesses in the past decade shows its potential,” Mahmoud Goudarzi was quoted by TSE.ir as saying.
It is vital for companies, startups in particular, to improve their financial reach, Goudarzi said.
“If and when businesses are familiar with different financial instruments, they can draw on them subject to their specific sphere and seek funding from the capital market alongside other sources.”
Goudarzi said in the past decades banks and investors normally looked closely at the physical assets of companies before deciding whether or not to support them.
“Now there has been a sea change… investors put their money where knowledge is produced.”
To create jobs and wealth, he stressed, Iran’s capital market too should support startups and knowledge-based enterprises.
“To do so, we have created special trusts to support SMEs, especially those in the provinces where unemployment is high. The capital market has a good record in funding small and medium-sized businesses and we encourage such enterprises to solicit funds from the stock market.”
The official added that from the total 7,800 knowledge-based companies in Iran, barely 2.2% are active in the capital market.
Stock market officials earlier said that the regulatory barriers for such firms have been removed and new guidelines for listing startups are in the pipeline.
Startups can now go public under special conditions. Special procedures, different from normal companies with clearly defined assets and financial structures, will soon be in place for startups.
Under the framework, startups will be required to sell shares only to professional investors, namely mutual funds, instead of the public via the popularly used book building method.
Iran has an estimated 7,000 knowledge-based companies and 1,600 startups. The government has welcomed the startup entry in the bourse and says it will support them given their gradually increasing role in the economy.
It has been reported that almost 30 startups have applied to join the share market, and Iran Fara Bourse, the junior equity market. Tap30, the ride hailing company, went public earlier this month becoming the first of its kind to make debut in the bourse.
Iran Fara Bourse (IFB) said earlier that more knowledge-based companies and startups will go public in the near future as measures are taken to facilitate the process.
By introducing ways of crowdfunding, easing regulations and promoting transparency, more companies in the digital economy should be able to list by March, IFB officials said earlier.
