EU Firms Seeking Potential Iran JVs

EghtesadOnline: Just as European corporation are making inroads into Iran’s market, investors are working their way to handle banking problems to break the ice in the post-sanctions era.

News ID: ۷۷۷۶۷۲

16 July 2017

This is while Asian investors are already active in Iran’s infrastructure projects and the US remains on the sidelines.

These were part of the comments made by Ramin Rabii, chief executive officer of Tehran-based investment company Turquoise Partners, in an interview with Bloomberg. According to Financial Tribune, the full text of the interview follows:

BLOOMBERG: In the wake of Trump’s presidency, what has been the change of foreign investment flows into the Iranian stock exchange?

RAMIN RABII: Overall speaking, the post-nuclear agreement, there has been a lot of hype and interest in Iran. A lot of foreigners visiting the country, financial investors, corporates, in the first one month or two months after Trump’s election, there was a bit of uncertainty.

It wasn’t clear what he was going to do with the nuclear agreement but right now after three months into his administration, it’s clear that there’s no alternative.

Europeans are moving forward with their deals with Iran and he’s been respecting the deal so the positive sign is that he signed the waiver of the sanction that must get presidential signature every quarter and he also allowed Boeing to sell planes to Iran, which was a very clear sign that he’s basically supporting the current deal.

Is it true that there’s very little investment in Iran and most companies are looking at it as an export market?

Well, that’s not the policy of Iran and the government whatsoever, so we are actually very much in need of new technologies and new management so the way it’s structured right now, corporates that are looking into Iran, they have to look actual investment and co-production and exporting from Iran if they want to survive long-term. It’s not just the market that they can sell their goods to.

In some cases like airplane, because of the sophistication of the product, that may be the case but in most products, Iran is actually a net exporting country. I mean for a lot of the European companies looking into Iran, Iran could become their hub of export for the whole MENA region.

If you look at the export numbers of Iran, last year for the first time Iran’s non-oil exports surpassed its total exports in history. So Iran is a net non-oil exporter of goods.

We have $3 billion export of food and beverage, $2 billion export of engineering, export of auto, so on and so forth. Five hundred million dollars export of chocolates per year.

So Iran is a production hub eventually for the region so they need to look into potential investment into the country.

What’s the interest from US funds, US investors; I know you hosted US investors in Iran a couple of years ago. Is that appetite still there?

The appetite is there but ... we have never had a US investor in any of our products although they do come as visitors. They see the country. They’re excited about it. But unfortunately because of the sanctions that pre-date the nuclear issue, American investors cannot still invest in Iran but Europeans are quite active.

Tell us about Europe and about Asian investors as well?

A lot of Asian investors, they’re active on a government-to-government level on more infrastructure projects. Europeans, when we look at post-sanctions Iran, on the financial investors, the pace has been slower than we hoped for and we anticipated mostly because large global banks are still not active in Iran so they have custody issues, financial investors when they want to invest in Iran.

Having said that, corporates are coming; European corporates are either setting up offices in Tehran, they’re looking into potential acquisitions, looking for potential JV partners and you’re seeing more activity on the corporate side than the financial investors.

And one of the very positive recent developments was the investment by Total into the Iranian South Pars, the gas field which was a very positive step because once these multibillion-dollar deals being signed by European corporates, then you need to have bankers backing them up so we hope that as a result of these large corporate deals, large global banks will also come to the market

How are you accessing banks overseas? I mean tell us how you execute transactions? Have you faced any problems since sanctions were eased?

We have. We have basically found a way to send money back and forth through the banking channel without any problem, but the banks we are using are mostly smaller Swiss and Italian banks. So are all the other Iranian corporates that are dealing with Europe; [they] tend to use smaller banks.

I’m talking about larger multinational banks that are not coming. Have we faced any problems? Yes. A lot of the financial investors when they want to subscribe to our products, their bankers, which are you know large banks, Swiss banks or multinational banks, a lot of them refuse to invest into our products not because of legality, because it’s 100% legal, we are an EU-regulated fund, but because their compliance officers or their internal compliance manuals don’t allow them to deal with Iran yet.

So that has been an issue but we are trying to resolve through making it easier for foreigners to invest in Iran through listed products. So for the first time, we have actually listed the product in London with exposure to Iran so people can buy and sell their shares on the markets here.