With the fiscal year drawing to a close the stock market regulator has expedited its listing process giving a nod to two new companies to hold IPO on Wednesday.
IPOs were put on hold for weeks due to steep volatility in share market. The last listing in late February was not welcomed by investors.
Companies making debut on Wednesday included an investment firm listed at Tehran Stock Exchange and a company active in rail transport. The latter was hosted by Iran Fara Bourse, the junior equity market.
Rail Pardaz Industrial Group, touted as the largest private railway company in Iran, offered 10% of its stake comprising 7.42 billion shares. The railroad company will raise 33 trillion rials ($132 million) via the IPO.
The company manages a railway fleet of more than 1,000 freight wagons, 200 passenger coaches and three factories manufacturing, refurbishing and repairing rail fleets.
Sarmayeh Madar Management Services company, an investment firm affiliated to the state-owned Bank Melli Iran, will cede 15% stake comprising 345 million shares. It is expected to generate 1.74 trillion rials ($7 million).
Both companies are to be priced via book-building mechanism. Book-building is a process by which an underwriter attempts to determine the price at which an IPO is to be offered. Price discovery involves recording investor demand for shares before arriving at the issue price.
Tapping into the upbeat mode in the bourse in the first half of the fiscal year (March-Sept. 2020), many companies went public and delivered good returns via secondary trade. With the stock market in a tailspin since then the IPOs declined significantly.
In a latest listing on Feb. 26. Opal Kani Pars Mineral Processing Company was not welcomed by retail investors and barely 2.7 million investors took part. The figure was almost half the record of investor turnout in IPOs.
IPOs used to return high amid frenzy of buyers competing to grab a slice of stakes of listed company. But with market indicators plummeting, the shares of many listed companies dropped below the prices set at the IPO, undermining trust of millions of investors as seen in the huge decline in new IPOs.
Investor turnout in IPO's reached its apex last September where 5.5 million partook in the offer by Peyvand Gostar Pars Energy Company.
