Iran Khodro Calls Off Sale of Controlling Stake

EghtesadOnline: Plans to float a 15.8% of controlling stake in Iran’s largest auto producer, Iran Khodro Group, were terminated in the early hours of Wednesday.

News ID: ۷۸۱۶۱۱

03 February 2018

The highly publicized stake was to be offered on Wednesday on the Tehran Stock Exchange and was to include more than 2.2 billion shares of Iran Khodro Company, including a 10% stake controlled by Samand Investment Company and 5.6% controlled by Negar Nasr Sahm Company, both IKCO subsidiaries.

“Buyers were not authorized by the Securities and Exchange Organization of Iran,” TSE deputy head, Ali Sahraei, was quoted as saying by Bourse 24.

“Whether the shares will be put up for sale in future is up to the owners’ decision,” Financial Tribune quoted Sahraei as saying.

The total value of the shares to be sold is 9.76 trillion rials ($214 million), 28.26% of which were to be sold in cash and 71.74% in installments over three years. Each share has a base price of 4,034 rials (8 cents).

The two subsidiary companies first announced the block sale on Dec. 10, 2017, and aimed to get job done in 10 days. But the process was delayed each time an announcement was made.

According to Bourse 24, the share block had two groups of tenacious buyers.

The first included a group of Iranian expatriate investors. They reportedly had obtained the permits for investing in Iran from the Ministry of Economic Affairs and Finance and had the go-ahead from the Organization for Investment, Economic and Technical Assistance of Iran.

For them, the primary obstacle was to verify their financial ability to the SEO. The issue was still being discussed by late Tuesday.

When Sahraei was questioned whether this was the reason why the sale was called off, he ambiguously said “supposedly.”

The second group of potential buyers was a consortium of auto parts makers who already have a stake in Iran Khodro and the addition of 15.8% would have increased their influence on the board of the country’s biggest car company.

Two of Iran’s largest auto parts manufacturer, Crouse and Ezam, were among the firms previously named as potential buyers. Having apparently been disqualified by the authorities, they seemed unyielding and pushed to join one of the two authorized groups, either individually or as a consortium.

Following reports of the cancellation IKCO shares closed 5% lower at 2,763 rials (5.9 cents) compared to the day’s opening price at 2,909 rials.