Iran Privatization Organization will sell the government's shares in the Mobarakeh Steel Company (MSC) and the Persian Gulf Petrochemical Industries Company (PGPIC).
A notice seen on the IPO website said the block sale is to include 5.2% of shares in MSC and will be offered on March 13. It said 27,560 billion shares of the steel giant worth 387.76 trillion rials ($738.5 million) will be on sale and buyers can make 70% of the payment in 6-month installments over three years with 30% down payment.
MSC is the biggest steelmaker in Iran and the MENA region, accounting for about half the country's steel production. The state-owned company is located 65 km southwest of the city of Isfahan, near the city of Mobarakeh, Isfahan Province.
Commissioned after the Islamic Revolution in 1979 and operating since 1993, MSC underwent a major revamp in 2000. It is one of the largest industrial conglomerates in Iran.
Mobarakeh Steel Company reported 1.15 quadrillion rials ($2.9 billion) in sales during the first nine months of the current Iranian year (March 21-Dec. 21), up 10% on the corresponding period last year.
An estimated 508,000 tons of steel products were exported from the company in the same period from the total 6.24 million ton output -- up 18% year-on-year.
Tehran Stock Exchange-listed mining firms sold 5.54 quadrillion rials ($13.85 billion) worth of products in the last calendar year (March 2021-22) -- 71% higher compared to the year before.
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 and/or unwilling to put up millions of dollars in such business.
PGPIC
In another notice, the IPO announced that it will offer 6.1% of the government's shares in PGPIC on March 15.
It said 30.4 billion shares of the petrochemical giant worth 601.77 trillion rials ($1.146 billion) will be offered in blocs and buyers should pay 25% of the price within 20 days from the conclusion of the deal and 75% in 6-month installments over three years at 18% interest.
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 in the bourse 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 output or 70 million tons a year. It also accounts for 41% of the total export.
The government sold 12% of its shares in PGPIC last October worth 1,087 trillion rials ($2.07 billion) that was billed as "the largest privatization deal in the country".
Divesting the petrochemical giant and meeting its budgetary needs comes despite pessimism stemming from disappointing divestment results in the recent past. According to the 2022-23 budget, the government expects to generate 710 trillion rials ($1.35 billion) from divestment.
Governments in Tehran have long struggled to fully privatize some major state-owned enterprises. The National Iranian Copper 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 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 sell-list.
