Iran Fara Bourse (IFB) says more knowledge-based companies and startups will go public in the near future as measures are taken to facilitate the process.
“Tap30, a ride hailing app, went public last year. Next will be Café Bazaar, Iran’s largest Android app store and Filimo, a popular video-on-demand platform,” Maysam Fadaei, the IFB chief, was quoted by SENA news agency as saying.
It has been reported that almost 30 startups have applied to join the share market, and Iran Fara Bourse, the junior equity market, says it has taken effective measures to ease the process, Fadaei said.
By introducing ways of crowdfunding, easing regulations and promoting transparency, several companies in the digital economy should be able to list by March, he added, without naming the companies.
“We plan to hold a Growth of Knowledge-Based Companies via the Capital Market” forum in mid-fall to introduce workable solutions to fund startups via the bourse.”
Fadaei noted that startups and knowledge-based companies wanting to join the stock market must go through a bloated bureaucracy that other companies with tangible assets are exempt from.
“One issue is the complex valuation process. Startups are largely intellectual property, making it difficult to assess them under normal valuation procedures.
Tap30, the ride hailing company, went public in November becoming the first of its kind in Iran to make debut in the share market.
Tap30, a ride hailing app, went public last year. Next will be Café Bazaar, Iran’s largest Android app store and Filimo, a popular video-on-demand platform
Using Tap30’s case, he said, “We sought help from the Supreme Audit Organization’s (the state ombudsman) Technical Committee to use an accounting formula that enables the assessing of startups’ intangible assets”.
The IFB, he noted, is of the strong opinion that pricing by the state is not feasible and the market can and will determine prices.
Iran’s stock market has reached a stage where individuals no longer have influence on prices and pricing. “Price discovery now is the function of professionals and specialized teams.”
Another constraint for startups is the long list of inquiries like those by the National Competition Council or about security issues. Yet, how these inquiries must be carried out and to what extent, is not exactly clear, the senior bourse official said.
Fadaei also referred to the issue of collateral and related risks. Startups will have to put up “a big portion”, almost 50%, of their shares as collateral with the IFB.
“This is not easy because the amount of collateral might interfere with the shareholding situation. The IFB contends that collateralized stocks are a major problem in the initial offerings by startups and is trying to address it.”
Stock market officials earlier said that the regulatory barriers for such firms have been removed and new guidelines for listing startups are being finalized.
Startups can now go public under special conditions. Special procedures, different from normal companies with clearly defined assets and financial structures, will soon be in place for startups.
Under the framework, startups will be required to sell shares only to professional investors, namely mutual funds, instead of the public via the popularly used book building method.
Iran has an estimated 7,000 knowledge-based companies and 1,600 startups. The government has welcomed the startups’ entry in the bourse and says it will support such firms given their gradually visible role in the economy.
