Economy, Business And Markets

Int’l Fund Managers Bullish on Iran Untapped Market

Int’l Fund Managers Bullish on Iran Untapped MarketInt’l Fund Managers Bullish on Iran Untapped Market

A major financial group that recently paid a visit to Iran's equity market is reportedly gearing up to invest in a new industry with an initial investment of up to $100 million, bourspress quoted Ali Sanginian, chief executive officer of  Amin Investment Bank as saying.

The group, whose name has not been disclosed, is expected to invest in Iran's capital market, said Sanginian adding that "they agreed to consider investing and bringing in their major sectors for investment within the next three months in a bid to engage practically ".

The group is said to enjoy broad experience in the heathcare sector in countries like Turkey, Egypt, Sudan, Algeria, and hence, their priority in Iran for investment is the heath sector, which unlike other sectors, is not grappling with western sanctions and is well-organized.

"With up to $8 billion investment in other countries, the group is willing to set up a holding in the healthcare sector with close to $100 million as its initial capital," Sanginian reiterated, adding that they will embark on surging their investment scale with the aim of acquiring hospitals, laboratories, and clinics, and then initiate to list them at the equity market. Hence, the healthcare sector is expected to be listed at the equity market in due time.

The foreign investor is planning to manage its assets directly in Iran for a period of three to five years, and then the assets will go public, said Sanginian. Negotiations with two hospitals have already been held, and their sales conditions have been precisely analyzed.

He further declared that the Amin Investment Bank has been appointed as the financial group's advisor, and representative in Iran.  

There is huge potential for investment in Iran's healthcare and health tourism. Iranian doctors are among the best in the world. Dentistry is highly advanced and Iran has the potential to become a medical tourism destination. The government has eased the process of developing these platforms as it sees the potential for high returns on investment thanks to the tourism potential.

US drug makers and healthcare companies are likely to see some gain following the preliminary framework nuclear deal reached between Iran and the P5+1 group,  as they've already had more access to Iran's markets under exceptions to sanctions for humanitarian goods. More than 50 medical companies received sanctions waivers from the US Treasury Department last year to export to Iran, including Boston Scientific, GE Healthcare, and Bausch & Lomb, Bloomberg reported. The problem they've faced is getting paid, particularly after Iranian banks were cut off from the SWIFT global payments system in 2012, according to Caitlin Webber, an analyst with Bloomberg Intelligence. (SWIFT stands for Society for Worldwide Interbank Financial Telecommunication.) From 2012 to 2014, the value of legal US pharmaceuticals exports to Iran fell by more than half.

Unlike a couple of months ago, there are fewer headwinds to deter investors to shun flocking to one of the most untapped lucrative markets across the world.

With a market capitalization of $110b, about 500 listed companies and daily trading of $80m-$100m, the Tehran Stock Exchange is about the same size as that of Dubai. It is currently trading at about 5.5 times earnings, against 10.5 times for the MSCI Frontier Markets index, and provides dividends in the low teens. Iran’s stock market is among the largest in the Middle East and could potentially attract tens of millions of dollars in foreign investments targeting such frontier and emerging markets if sanctions are lifted.

> EU Investors En Route

In a few weeks, London-based boutique investment bank First Frontier will be taking a group of European institutional investors to Tehran, Thinkadvisor reported.

This is the firm’s first trip to Iran, a country that has been off the US investment horizon for decades, but that even to many European investors, is also largely unknown and off-the-charts. But Nicholas Banszky, chairman of First Frontier, hopes the Tehran trip will result in a long and fruitful involvement in Iran, which he believes represents tremendous investment potential.

“This is something we’re very committed to and we see it as a huge opportunity,” he said.

The progress of the negotiations that have taken place thus far between Iran and the US have generated a great deal of excitement in the international investment community. Many US investors believe that if the sanctions against Iran eases, it could open the door to foreign investment—which the country desperately needs, and in large quantities, too.

Now, though, “the government has tightened monetary policy and stabilized the currency, which has brought inflation down to around 15% from 45%,” he said. “Growth has picked up and is supported by a big surge in investment.” Robertson believes that Iran is prime for foreign investment.

“There is no other country in the world that is in the top 30 global economies that has been as closed to global investors as Iran has and I doubt we’ll have this opportunity again,” he said.