BIM to Sell Majority Stake in Investment Arm

Bank of Industry and Mine will be the first Iranian bank to sell off its excess assets on the capital market.

The state-owned lender is scheduled to offer a 51% stake in its investment arm, Industry and Mine Investment Company on Tuesday.

Over 2.29 billion shares with a base price of 1,900 rials per share will be offered on Tehran Stock Exchange in a block sale. The highest bid will win three seats on the company’s board of directors, Bourse 24 reported.

Despite most banks’ downsizing announcement, including Bank Saderat and Melli, none has materialized yet.

The government wants lenders to focus primarily on financing the production sector, by being less of a business-owner and more of a bank.

Based on Articles 16 and 17 of the law on “removal of obstacles to competitive production and boosting the country’s financial system”, all banks and financial institutions are to privatize at least 33% of their excess assets every year, especially those engaged in “non-banking activities”.

This can be realized by cleaning up the bank’s excess assets, most of which are either toxic or underperforming.

A BIM official, however, believes its investment entity is a healthy asset and has already garnered the attention of buyers.

“We have so far had several bids for the shares. Also, considering the price, we’ve had potential buyers stepping forward for the block,” Abolfazl Najjarzadeh, the head of general meetings and subsidiaries’ affairs of BIM, told Bourse 24.

“Bank of Industry and Mine is ready to sell assets deemed excess as per the Central Bank of Iran’s directives,” he said, adding that other assets will be offered by the end of the current fiscal year (March 21).

BIM has stakes in four other publicly-traded companies, namely a 65.73% stake in Atieh Damavand Investment, 49.9% in Iran Chemical Industries Investment Company, 43.32% in Industry and Mine Leasing Company and 15.06% in Mazandaran Cement Company, Tehran Stock Exchange’s data showed.

Analyzing some of these subsidiaries’ performances show them to be less-than-stellar.

Iran Chemical Industries Investment Company, for instance, has had its net profit halved in the last four years. It dropped from 6 trillion rials ($127.9 million) in the fiscal 2013-14 to 2.99 trillion rials ($63.74 million) so far this year.

The company’s sale prices of its primary products are rising while profits are not, indicating a disparity between production costs and finished prices.

A devaluating rial against the US dollar and euro is also making things harder for the company, as its expansion and cost-cutting requires the adoption of advanced foreign technologies.

BIM is expected to shed light on its subsidiaries’ performance in its next general meeting.