50 SMEs Referred to IFB for Funds

To generate financial resources from the capital market, 50 small- and medium-sized enterprises have been referred to Iran Fara Bourse.

Deputy Minister of Industries, Mining and Trade Ali Yazdani also told IRNA that eight SMEs have already been accepted.

“IFB will accept the industrial entities, provided they submit their audited financial statements,” he said.  

Iran Fara Bourse over-the-market exchange set up a platform for trading the shares of small- and medium-sized enterprises in December.

The move is expected to give a shot in the arm to Iranian SMEs, which account for more than 90% of all companies across the country, but have a small share in gross domestic product.

According to Yazdani, who is also the chairman of Iran Small Industries and Industrial Parks Organization, 88,000 certified small businesses account for 42% of employment and 17% of production in Iran’s industrial sector.

By definition, enterprises run by 50 workers or less and 100 workers or less are considered small- and medium-sized respectively.

“The advent of SMEs in the capital market will help drive the economy toward greater transparency. It will also spur employment and growth by funding smaller businesses,” CEO of Securities and Exchange Organization Shapour Mohammadi said.

Rouyesh Lotus, Iran’s first venture capital trust to be listed, opened for underwriting on Iran Fara Bourse. The fund, which will invest in healthcare, biotechnology and financial technology, hopes to raise 105 billion rials ($2.6 million) for Rouyesh Lotus during the underwriting period from investors on IFB and 350 billion rials in the next six months.

Based on regulatory requirements by the Securities and Exchange Organization, venture capital funds must keep 30% of their investment in cash to maintain their liquidity.

According to Sorena Sattari, President Hassan Rouhani’s deputy for technology, loans are not a good method for funding newly-formed startups and a considerable part of their capital should come from venture capital funds as equity.

Nonetheless, reports show that the government granted loans worth 156.8 trillion rials ($4.1 billion) to 22,893 small- and medium-sized enterprises in the 11 months to February 18, 2017.

The loans are part of a government plan to provide struggling SMEs with a total of 160 trillion rials ($4.2 billion) this year to stimulate the industrial sector, which has been grappling with deep recession in the past few years.

Farshad Moqimi, the deputy head of Iran’s Small Industries and Industrial Parks Organization, said small- and medium-sized enterprises have attracted $1.84 billion in foreign direct investment since President Hassan Rouhani took office in August 2013, of which $653 million have been invested since the implementation Iran’s nuclear deal.

“Since Rouhani became president, foreign investors have signed 47 contracts to establish small- and medium-sized industrial firms, creating 2,740 jobs,” he said.

“These contracts have been signed with Turkey, Azerbaijan, Ireland, Japan, Iraq, Afghanistan, Croatia, China, Germany, France, Turkmenistan and the UAE. Of all the agreements, 25 projects have become operational and the rest are either under construction or their machinery are being installed.”

Moqimi noted that seven of the 47 contracts have been signed since the removal of sanctions.

Years of sanctions imposed against Iran over its nuclear energy program began to roll back in January 16, 2016, as part of a historic deal the country cut with world powers in 2015. In exchange, Iran has agreed to limit the scope of its nuclear program.

Last month, Deputy Minister of Industries, Mining and Trade Reza Rahmani said some 20,000 SMEs have emerged from recession since the beginning of the current Iranian year (March 20, 2016).