Close to nine billion dollars was raised through Iran's capital markets in the year ending March 21, 2015.
Iran's capital markets are playing an increasing role in corporate financing, though it is still far from the banking system's clout in this regard. According to the Securities and Exchange Organization, around 292.7 trillion rials ($8.85 billion at market exchange rate) of funds were raised in debt and equity during the period.
Of the funds raised, 273.7 trillion rials ($8.28 billion) were capital increases, accounting for 93.5 percent of the total, deputy for supervision on exchanges and issuers told the press on Tuesday. "During the 2014/15 fiscal year our department issued extraordinary meeting permits for 175 companies' capital increase," Gholamreza Aboutorabi said.
Sukuk Financing
Furthermore, 16 trillion rials or 5.5 percent of the total were raised though corporate sukuk – Islamic bonds. Also during the period three trillion rials were raised in IPOs.
The growing role of sukuk in Iran is a sign that financial innovation and Islamic law have finally started to work together. Islamic scholars have shunned Bonds in the recent past, because they thought them usurious. That is changing. Currently, there are three different sukuk on offer in Iran's financial markets, called Mosharekat, Ejare, Morabehe securities.
Capital Increase
Nearly 70 percent of the capital increases came from new money attracted by companies. Out of the 273.7 trillion rials raised in equity, 186 trillion rials were raised through public offerings and shareholder money.
Some companies were just updating and changing their books. Over 58 trillion rilas were raised from retained earnings and 29 trillion rials through revaluation of assets, Aboutorabi said.
Sector Break Down
The petrochemical industry topped the list of cash hungry industries, taking 24 percent of the money raised. Financial sanctions over Iran's nuclear dispute with the West have crippled many of Iran's industries. The petrochemical producers are one of the worst hit sectors.
Base metal industries took the second spot with a 19 percent share. Third is multi industry holdings which took 12 percent of the money raised.
The cash-strapped banking industry also raised money in the capital markets, having an 11 percent share of the total. According to Aboutorabi, eight lenders requested permits to raise equity during the period, all of which received it. Lenders Pasargad, Saman, Tourism, Sina, Ansar, Ghavamin and Post Bank of Iran were the applicants.
Although these numbers may seem impressive, they are far too small to have critics consider the equity markets as a viable source of corporate financing in Iran. Just consider that banks lent around $95 billion to businesses last year.
