US investors are at risk of getting shut out of deals in Iran while their European competitors get a head-start on billions of dollars in opportunities unlocked by the lifting of international sanctions, according to Greylock Capital Management.
“It seems like the US might miss this opportunity because the Europeans are going to move, regardless,” Hans Humes, Greylock’s chief executive officer and chairman who traveled to Iran in June, said in an interview in Mexico City.
“It almost doesn’t matter what the US does because once it starts opening up to Europe, I think the economy in Iran will start to move.”
Foreign investors and multinationals are lining up to return to Iran after last year’s historic nuclear deal led to the lifting of international sanctions in January, Bloomberg reported.
Until then, firms were prevented from transferring money in and out of the Islamic Republic, whose $370 billion economy is projected to grow 5.8% this year.
While European companies like German automaker Daimler AG and France’s Airbus Group SE have already signed deals, American citizens and companies remain limited because the US has kept some of its own restrictions.
Changing the Treasury Department’s Iran policy toward processing payments would “open things up”, said Humes. His New York-based hedge fund, which oversees about $1 billion, focuses on distressed and high-yielding emerging-market debt.
The US severed ties with Iran a year after the 1979 Islamic Revolution that toppled the US-allied Shah and led to the US embassy hostage crisis in Tehran.
US President Barack Obama initiated a detente in 2013, eventually sealing an international accord with Iran, despite Republican lawmakers’ opposition.
Humes sees the biggest opportunities in Iran’s energy, infrastructure and corporate services. He said that the investment opportunities may be worth “multiple tens of billions” of dollars in the next five to 10 years.
“Europe is likely to get in first with banks there hopefully starting to ramp up transactions with Iranian lenders in the next year, he said. Humes noted that the entrance of US institutional investors will likely be two to three years away.
“Everybody sees the opportunity in Iran,” he said. “It’s going to happen and the trigger for that will just be the payment system opening up.”
Greylock Capital Management is a US Securities and Exchange Commission registered alternative investment adviser that invests in emerging and frontier markets worldwide. The firm’s investor base consists largely of institutional investors, including sovereign wealth funds, pension funds and insurance companies.
