Economy, Business And Markets

Swedish Firm Plans IPO for Iran Investment

Swedish Firm Plans IPO for Iran InvestmentSwedish Firm Plans IPO for Iran Investment

Swedish firm Pomegranate Investment AB plans to launch the first initial public offering to raise capital for investments in Iran since western sanctions on Tehran were lifted.

Chief executive Florian Hellmich told Reuters on a visit to London on Monday that the firm, which has raised €80 million ($91 million) from European investors since 2014 in anticipation of sanctions easing, hopes to launch its IPO in Sweden within 12 months, for investments in Iran's consumer technology sector.

He declined to say how much it might raise, but US and Canadian citizens and corporations will be excluded from the offer amid remaining US sanctions against Iran.  

Sanctions against Iran were lifted in January 16 after the UN nuclear agency confirmed that the country was in compliance with the terms of the July 2015 landmark deal with world powers to limit the scope of its nuclear program.

Nonetheless, the United States still forbids its own nationals and firms from doing business in Iran and prohibits dealings with a list of designated Iranian entities.

To avoid any risk of infringing a ban on dollar payments to or from Iran passing through US financial institutions-one that still frightens European banks, some of which received heavy US penalties for doing business in Iran-all transactions are done in euros.

“We have learned to operate in a sanctions environment, which means we have had to engage in a high amount of KYC (“Know Your Customer”): legal due diligence of all our partners, including the banks we do business with,” Hellmich said on a visit to London.

Hellmich, a veteran of emerging markets including Russia who was previously with the Moscow-headquartered investment bank Renaissance Capital, said Pomegranate, set up in Sweden in 2014, was working with a “combination of Swedish banks and Swiss banks”, but declined to be more specific.

“We found regional banks with no US exposure a lot more accommodating in how we do business,” he said.

Around 50% of Pomegranate’s shareholders are from Sweden, including the prominent investor Per Brilioth, and others come from Britain, Switzerland and elsewhere in Europe.

“We have engaged an armada of lawyers who have been advising us in terms of disclaimers and due diligence. Again it comes back to the cost of doing business. It is time-consuming,” Hellmich said, adding that “this is also where the opportunity is-everyone could have done the work we have done, but nobody has”.

The firm has already taken minority stakes in Iranian companies, including the Internet and e-commerce company Sarava.