The government sold 12% of its shares in the Persian Gulf Petrochemical Industries Company (PGPIC) on Monday worth 1,087 trillion rials ($3.33 billion) marking "the largest privatization deal in the country", head of the Iran Privatization Organization (IPO) said.
"After a three-day race between two bidders, namely AHDAF Investment Company affiliated to the Iran Petroleum Pension Fund and Tehran Oil Refining Company, the deal was concluded Monday and AHDAF emerged as the winner offering 32% above the base price for the block of shares," wire services quoted Hossein Qorbanzadeh as saying.
"The base price was 13,970 rials per share, but it shot up by 32.5% in three days of bidding to reach 18,500 rials," Qorbanzadeh said.
The two main participants collectively made 270 bids.
As per an earlier announcement by IPO, 58.740 billion shares of the petrochemical giant worth 820.5 trillion rials ($2.58 billion) were to be offered with buyers allowed to 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 happens 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 or unwilling to put up millions of dollars in such business.
PGPIC is a public holding company that owns natural gas processing plants, chemical factories plus oil and polymer companies. It is the biggest consortium of domestic petrochemical producers.
Largest Listed Co.
With market capitalization estimated at 3,367 trillion rials ($10.6b), the company is the largest of its kind listed at the Tehran Stock Exchange and the second 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 exports.
Government success in divesting the petrochemical giant and fulfilling its budgetary needs comes despite pessimism stemming from disappointing divestment results in the recent past.
The IPO chief earlier concurred that the “government’s projected income [from divestments] would likely not be realized”.
Governments have long struggled to fully privatize some major state-owned companies. The National Iranian Copper Industry Company, Mobarakeh Steel Company and the two main 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 had 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, 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.
