The government will sell some of its shares in the Persian Gulf Petrochemical Industries Company (PGPIC) and Sabzevar Pars Steel Complex, the Iranian Privatization Organization said.
The block sale, including 12% of government shares in PGPIC and 7.13% in Sabzevar Pars Steel Complex, will be held on Oct. 29 at the Tehran Stock Exchange, the IPO website said.
It said 58.740 billion shares of the petrochemical giant worth 820.5 trillion rials ($2.58 billion) will be offered and buyers can make 70% of the payment in 6-month installments over four years by first paying 30%.
Block trade typically involves large numbers of equities or bonds traded at an arranged price between two parties. At times this is done outside the open market to lessen the impact on share prices.
Block sale of shares in Iran has been tried and tested several times in the past but failed to achieve the desired results simply because under the dire economic conditions buyers are unable/unwilling to put up millions of dollars in such business.
PGPIC is a public holding company that owns natural gas processing plants and chemical factories, as well as oil and polymer companies. It is the biggest consortium of domestic petrochemical producers. With market capitalization estimated at 3,367 trillion rials ($10.6b), the company is the largest of its kind listed with the Tehran Stock Exchange and the second largest in the Middle East.
As Iran’s largest petrochemical company with 60 subsidiaries, PGPIC accounts for around 42% of the national petrochemical production or 70 million tons a year. It also accounts for 41% of Iran's petrochemical exports.
Steel Complex
In another press release, the IPO said it will offer 258,336 million shares in Sabzevar Pars Steel Complex, with a base price of 34,820 rials per share and total value of 9.035 trillion rials ($28.5 million) in late October.
Potential buyers can reimburse 60% of the payment in 6-month installments over two years and pay 40% in cash.
SPPS was founded in 2015 in North Khorasan Province. It produces sponge iron mills plus steel making and casting machines.
The initial public offering by the company was held in 2021 in which the government sold 15% of its shares.
Privatization Targets
According to the 2022-23 budget, the government expects to generate 710 trillion rials ($2.4 billion) from divestment.
Observers say this is a tall order, citing disappointing results of the government divestment agenda in the recent past.
Recalling the poor performance in monetizing the remaining stakes in several listed companies this year, Hussein Qorbanzadeh, the IPO chief, earlier concurred that the “government’s projected income would likely not be realized”.
Revenue from selling shares “is not a sustainable income source similar to taxes” and a variety of factors are at play when it comes to realization of revenue anticipated in the annual budgets.
One hurdle to divestment is the fact that in many cases the target companies have put up shares as collateral with banks to borrow.
The government has long struggled to fully privatize some big companies by ceding remaining stakes. The National Iranian Copper Industry Company, Mobarakeh Steel Company and automakers Iran Khodro (IKCO) and SAIPA are some big names in which the government is the majority shareholder.
In August the privatization organization added 20 state and government owned companies to the list that the government plans to fully divest. The new candidates are refiners in Kermanshah, Khuzestan and Arak plus the giant Persian Gulf Star Oil Company, in which the government has a 17.9% stake.
The list includes Esfarayen Industrial Complex, Esfarayen Lule Gostar Company, a steel tube firm, Jajarm Aluminum, South Aluminum Company, Azarbaijan Steel company, two steel companies in Baft and Meibod in Yazd Province, Kish Airlines, two mass construction companies affiliated to the Urban Regeneration Corporation, Sefidroud Agro and Livestock Company, Sugarcane & By-Products Development Company.
The two main football clubs, Esteghlal and Persepolis, are also on the list. The clubs recently went public but the government still holds the majority shares.
