Foreign investors are looking at the fast emerging opportunities in Iran, which is being referred to as one of the world’s last frontier markets. A few institutional investors have already beaten a path to Iran’s door by initiating talks in a bid to pick high yielding industries for investment. The Financial Tribune conducted an interview with Farhad Jaberi, the foreign investment manager of Noavaran Amin Data Processing Company, asking his opinion regarding the untapped opportunities in Iran’s economy. Jaberi has completed his MBA in financial accounting and statistical analysis and worked as financial advisor and manager for Merrill Lynch, JPMorgan, and RBC Dain Rausher in the US.
How do you see Iran as a new emerging market?
I believe there are big investment opportunities in Iran. Anything that can create jobs and take advantage of Iran’s intellectual capital is going to be a win-win situation for employees, corporations and society in general. Iran is an untapped market, the full advantages of which have not been realized over the past 35 years. There are however certain structural and infrastructural obstacles, which appear to be getting resolved.
I am very optimistic that Iran is going to become an emerging market in the next 12 to 24 months. A lot of new industries will be created at a quick pace. Whoever enters the market sooner is going to be more successful; hence, the key is to benefit from the upcoming opportunities and to prepare the groundwork in advance.
Investors can step into any industry such as healthcare, technology, petrochemical, etc. and be assured of high returns. Proper management, forward thinking, and access to foreign capital will lead to creation of new jobs and economic prosperity.
What would you tell institutional investors waiting to attract international fund managers?
They need to provide the foreign investors with sufficient information to reassure them that their money is in safe hands. Trust is built over time, but foreign investors are in a rush to find out about the growth opportunities in Iran’s lucrative market.
They need to know about the industries, their metrics, their growth story and how much profit margin they can expect. Moreover, they will be concerned about the safeguards, the methods of money transaction and the risks involved. Once they understand the risks and have access to the necessary information from systematic audits, they can effectively evaluate the companies. This is obviously not going to happen overnight, but they are willing to take baby steps and move forward.
Maybe the country could establish some neutral zones, where the foreign fund managers could invest in order to test the market before moving to more risky areas. Of course if you take more risks you expect more returns. There are some people who are willing to commit capital to high-risk businesses in hope of high returns.
Given your experience in the US capital market, do you think the Americans are willing to invest in Iran?
I think so. Last week a group of 24 businessmen from the US came to Iran disguised as tourists.
I think they are testing it. Iran is a very stable and strong country in the Middle East and the 6th biggest oil producer in the world. The political landscape has changed and lots of opportunities lie in here. Hence, everything is getting set to attract foreign investors to explore Iran’s frontier market.
Which industry has the highest return potential?
Various industries have the potential to grow. Healthcare is among the most lucrative industries, where many opportunities are available already even with the western sanctions in place. The auto industry and power sector are among other such industries. There are so many options to pick from.
The first thing to look for in any business is to identify the needs. In the US, you have to search for a long time to find a need that hasn’t already been fulfilled. Whereas, in Iran many of the needs remain unanswered; therefore it is more likely to create businesses to take care of these needs.
