The government plans to sell part of its stake in the two main football clubs, Esteghlal and Persepolis, via block trading.
Head of the Iranian Privatization Organization Hossein Qorbanzadeh made the announcement Friday in a talk with Fars News Agency.
In mid-March, the two popular football clubs offered 10% stake via subscription that lasted for a month ending April 4.
Qorbanzadeh said the IPO seeks to sell the remaining government shares via block trading and divest 50% of its share in the soccer clubs by September.
Block trade typically involves a large numbers of equities or bonds traded at an arranged price between two parties. This at times is done outside of open market to lessen the impact on the security's price. Due to the size of block trade, individual investors are rarely involved.
“It is forecast that each club should offer a block comprising 17-20% stake via auctions in the stock market,” Qorbanzadeh said.
The IPO has issued a notice calling on potential buyers to take part in the auction for the anticipated block sale. A special committee will assess the qualification of prospective buyers.
However, past experience shows that block sale of shares in Iran has been tested and failed several times because under the dire economic conditions potential buyers are unable or unwilling to buy blocks of shares worth millions of dollars.
The plan to list the two football clubs were put into motion two decades ago but the government finally managed to list them in the bourse through a subscription in mid-March.
Subscription of stocks refers to newly issued securities that an investor agrees to buy prior to the official issue date. When investors subscribe, they expect to own the designated number of shares once the offering is complete.
Esteghlal’s stake on offer comprises 1.23 billion shares each priced at 2,910 rials. Persepolis plans to offer 1.034 billion shares each costing 3,387 rials.
The subscriptions so far have generated 3.6 trillion rials ($14 million) for Esteghlal and 3.5 trillion rials for Persepolis. The income from the subscriptions will be used for increasing the capital of the clubs through share premium.
Tickers of the newly listed clubs are traded on the Base Market of the Iran Fara Bourse, which is normally designed for listing companies with low accounting and transparency standards.
The listing comes after recent media reported on the possibility of banning the two clubs from the AFC Champions League 2022 because they failed to meet the requirements for obtaining the entry licenses.
