The government said it will help fund half-finished projects by offering them to the public via the stock market as project-based companies, Economy Minister Ehsan Khandouzi said.
"The government intends to use the stock market to provide funds for incomplete projects…The plan is to offer shares of project-based companies for extracting gold and refining copper," Khandouzi was quoted as saying by SENA on Tuesday at a press conference.
He said, "The aim is to provide capital for such projects and create attractive returns," and added that the measure is expected to help boost liquidity in the capital market and attract investment.
The minister emphasized the role of a robust share market to underpin production and growth.
"The key function of a functioning stock market for the real economy is to enhance stability and efficiency. Moreover, effective financial tools should be available to producers to ensure strong financial support."
In the past funding was largely bank-based but “now we must gradually complete the financial chain with other meaningful tools."
The government wants to employ the financial supply chain while maintaining market stability and efficiency, the official said, noting that the government aims to increase IPOs mainly of prominent tech startups and other venues such as bonds as demanded by the listed companies.
"The central bank is expected to do its part by setting a maximum interest rate on bonds, which can and will significantly boost access to funds.”
Khandouzi expressed the hope that “cooperation from the Central Bank of Iran regarding caps on interest rates on bonds” would produce the desired results.
The Raisi administration says it will help promote market stability by easing access the financial supply chain and by extension ensure decent growth rates.
The move to fund unfinished projects should, among other things, help boost the economy, create jobs and lift export.
First Project-Based Company
Gostaresh Sukht Sabz Zagros Company on Monday received approval for an IPO for its bioethanol fuel production units in the cities of Kermanshah and Basht City in Kohgilouyeh-Boyerahmad Province from the Tehran Stock Exchange.
The registered capital of the company is 5 trillion rials ($9.6 million), and Iran's Industrial Development and Renovation Organization (IDRO) is the major shareholder of the company, the Tehran Stock Exchange website reported.
The project in Kermanshah, with a capacity of 66 million liters, has made approximately 94% progress, while the Basht project with the same capacity, has made roughly 16% progress. Both projects are expected to come online in the second half of 2023 and 2025, respectively.
Following the completion of legal and regulatory procedures and the issuance of a subscription license by the Securities and Exchange Organization, investors in the bourse will be allowed to subscribe to the IPO of the project-based company.
Iran's Securities and Exchange Organization approved regulations in 2021 for setting up public joint stock companies mainly for project funding.
The ‘Project Public Joint Stock Company’ will complement the stock market and facilitate funding for economically viable projects. Project companies will help fund megaprojects seen as technically and economically feasible.
The project company should be affiliated to a public joint stock company listed on the bourse and perform as the financier of the parent company.
Minimum capital needed to set up a project company is five trillion rials and owners must secure half the capital before offering shares.
The main shareholders’ contribution should be in kind, including assets such as land, buildings and machinery.
Intangible assets such as brands, trademarks… will not be accepted as the investor(s) contribution to the company capital.
The TSE has been focusing on project-based companies to strengthen the primary market and attract investment. "The first project-based company will be listed within two weeks," Mohammad-Amin Ghahremani, TSE deputy for publishers and members of the exchange, was quoted as saying by the news agency SENA earlier this week.
Ghahremani said the TSE is negotiating with publishers seeking funds for the projects. In January, the TSE called on the SEO to launch a specialized market for funding project companies.
According to Mahmood Goudarzi, the TSE chief, companies will not be listed in a separate market. The main function of the market is to finance projects of public joint stock companies.
