Iran Government to Divest Assets Worth $4.5b

Speaking at a meeting with members of the Majlis Economic Commission on Monday, Farhad Dejpasand said the plan includes selling shares of state-run companies in the stock market plus direct divestment of government property to private buyers. 

“The Economy Ministry has issued notice for divesting state companies worth 270 trillion rials [$1.2b],” he was quoted as saying by the parliamentary news website ICANA. 

Reiterating that the government’s policy to downsize and privatize state companies, Dejpasand regretted the lack of “qualified buyers” as an obstacle to the divestitures.     

Among companies on the divestment list are giants like the Pars Agro-Industry & Animal Husbandry Company, Esfarayen Industrial Complex, Wood, Metal, Plastic and Electronic Industrial Complex (Sima Choob), South Aluminum Corporation (SALCO), Hegmataneh Petrochemical Compnay, Shahid Abbaspoor Dam & Power Plant Operation & Generation Company, Yazd Meat Company and Iranian Catalyst Development Company. 

According to offers seen on the website of the Iranian Privatization Organization, for most of the above companies potential buyers should pay at least half the money in cash. 

It appears few private buyers can afford the blocks of government shares worth hundreds of millions of dollars. For example, the government stake in Esfarayen Industrial Complex is said to be around 190 trillion rials ($826 million). 

Divestment plans also include retail sale of government shares in listed state companies. 

The government sold assets worth 1,240 trillion rials ($5.4b) in the last fiscal year 320 trillion rials via the stock market – above the 115 trillion rials projected in last year’s budget. 

Role of ETFs 

Most of the earnings were from the sale of shares in big companies via two exchange-traded funds. 

The government also offered retail sales of shares. It sold ETF units worth 130 trillion rials ($565m) to four million people in September 2020. The ETF held government shares in four major refineries, namely Tehran Oil Refining Company, Esfahan Oil Refining Company, Tabriz Oil Refining Company and Bandar Abbas Oil Refining Company.

Shares divested in government-owned refineries via the ETF accounted for 20% of the total and the rest had no buyers. 

In May 2020 the government sold stakes in three banks and two insurance companies. This ETF held 17% of government shares in Tejarat Bank, 17% in Bank Mellat, 18.32% in Bank Saderat Iran, 17.34% in Alborz Insurance Company and 11.44% in Amin Reinsurance Company totaling 58.86 trillion rials ($255m).  

While the government normally publicizes its success in selling shares in the stock market, observers say the divestment schemes indeed are attempts to raise funds to cover its ballooning deficits that have harmed the bourse. 

It merits mention that share prices, particularly in giant state companies, increased dramatically in the first five months of the previous fiscal before entering a deep correction phase in mid-August that has continued. 

Share prices plunged in the follow-up to the excessive offer of shares in big companies after prices reached their peak.