President Hassan Rouhani on Friday instructed the Ministry of Economy to speed up the process of divesting government stakes in state-affiliated companies.
In a talk with the minister, Farhad Dejpasand, Rouhani ordered the ministry to quickly create the conditions to sell shares of companies controlled by the government, public entities and military organizations via the stock market, the government news website dolat.ir reported.
The Cabinet had earlier approved framework for divesting the government’s stakes in state-run companies. As per the mechanism, the government’s remaining shares in companies listed with Tehran Stock Exchange and Iran Fara Bourse (junior equity market) will be sold to public via two methods, namely through exchange-traded funds or book building--a process by which an underwriter attempts to determine the price at which an IPO will be offered.
Price discovery in book building involves recording investor demand for shares before arriving at an issue price.
The government has reportedly considered discounts in the new divestiture to attract buyers. Pricing will be based on average final price of shares displayed on the TSE and IFB bulletin boards during a calendar month to the day prior to the subscription date. Prices will be subject to up to a 25% discount.
The scheme is enshrined in the fiscal March 2020-21 budget. As per the rules, companies and organizations are obliged to name subsidiaries in which the government’s share is below 50%.
They are required to also send the names of companies to the Ministry of Economy and the Plan and Budget Organization by June.
$3.2b Plan
In line with efforts to help curb government role in the economy, there are plans to divest the residue of government’s stakes in 18 companies worth 520 trillion rials ($3.2 billion).
The government’s assets on sale include a 20% stake in state-owned oil refineries in Tehran, Tabriz, Bandar Abbas, Esfahan, 17% in Tejarat Bank and Bank Mellat each, 18.3% in Bank Saderat Iran and 11.44% in Amin Reinsurance Company.
The list also includes 18.96% share in Persian Gulf Petrochemical Industries Company, 12.05% in the National Iranian Copper Industry Company, 17.2% in Mobarakeh Steel Company,14.04% in Iran Khodro (IKCO), 23% in SAIPA, 40% in Pars National Agro-Industry and Animal Husbandry Company, and 13.02% in the National Investment Company of Iran.
In a report covering the government performance on divesting its properties, the Ministry of Economy said it had sold 30 trillion rials ($185 million) worth of government shares in companies during the last fiscal year that ended on March 19.
