Iran Fara Bourse, the junior equity market, hosted a subscription for units of a private equity fund on Monday -- the second of its kind.
The fund is dubbed as Turquoise Servat Afarin Private Equity Fund and its ticker symbol is displayed on the IFB bulletin board as ‘Servat’. It is operated by Turquoise Partners, a leading financial service company in Tehran, the IFB news portal reported.
A PE fund is a pooled investment scheme used for investments in equities. Institutional and retail investors provide the capital for the private equity, and capital can be utilized to fund new technology, expand working capital and bolster balance sheets of the companies.
Among the advantages of private equity are easy access to alternate forms of capital for entrepreneurs and company founders and less stress of quarterly performance. Those advantages are offset by the fact that private equity valuations are not set by market forces.
Speaking at a ceremony to launch the PE fund on Monday, Mohammad Hassan Malihi, a member of the investment committee of the fund, said the lifespan of the fund will be seven years, six of which is for investment activity and in the final year the fund will be liquidated and dividends will be paid.
Regarding the investment scope of the new fund, the asset manager said it has a mandate to invest in assorted sectors, namely agriculture, chemicals, food, metal and minerals.
The Turquoise fund’s return is projected at 58% , according to Malihi.
Iran's Securities and Exchange Organization, the stock market regulator, passed rules and a charter for private equity funds in Nov. 2018.
Private equity funds have the option of investing in non-public companies. Regulations allow private equity funds to support public companies not yet listed, those listed on Iran Fara bourse's SME market and businesses that have failed to meet listing eligibility.
