The exchange-traded fund holding shares of the government in four refineries listed with Tehran Stock Exchange started trade on Tuesday.
The ETF, dubbed ‘First Refinery’ holds government shares in Tehran Oil Refining Company, Esfahan Oil Refining Company, Tabriz Oil Refining Company and Bandar Abbas Oil Refining Company.
It was announced earlier that the government owns 20% of shares in each refinery, which was partially sold to the public in September via the ETF.
The ETF was supposed to begin work a month after buyers subscribed for its units in late September. This was postponed as the stock market regulator said it was waiting for “better market conditions” and let shares of the ETF appreciate to prevent negative returns to subscribers.
Despite the efforts, the opening of the refinery ETF was not impressive like a similar bank-based ETF that went public in May.
The refinery ETF gained only 13% on the first day of secondary trade compared to the 130% growth in the first day of trade in the bank-based ETF in late May.
The government’s move to sell shares in four major refineries via the ETF was not well received by investors as barely 20% of the assets were sold in the subscription phase.
Subscription coincided with heavy downturn in the bourse where investors preferred to step back rather than put money in stocks.
As per available data 4 million people took part in the subscription and bought ETF units worth 130 trillion rials ($520 million). The government had plans to divest shares worth 600 trillion rials ($2.4 billion) in four refineries.
ETF units were priced based on average final prices of ticker symbols of the four refineries on the TSE bulletin board a day prior to the subscription. The government initially offered 20% discount on this price to encourage buyers. Later the discount increased to 30%.
In May the government sold stakes in three banks and two insurance companies via the first ETF. It was inaugurated with 17% of government stakes in Tejarat Bank, 17% in Bank Mellat, 18.32% in Bank Saderat Iran, 17.34% in Alborz Insurance Company and 11.44% in Amin Reinsurance Company.
