6 Major Iranian Public Firms to Be Privatized

EghtesadOnline: Iranian Privatization Organization is scheduled to transfer the shares of six public companies to the private sector in the current Iranian month (started Feb. 20).

News ID: ۷۸۱۸۱۶

21 February 2018

The companies include Iran Aluminum Company, Esfahan Steel Company, Ahwaz Rolling and Pipe Mills Company and Amin Reinsurance, as well as Alborz and Asia insurance companies. Their shares will be put up for sale on the equity market and offered via tenders.

Most of the assets are underperforming and financially struggling.

IRALCO will see 1.01 billion or 19.5% of its shares priced at 2,000 rials per share offered on the equity market on Feb. 24, with 20% of the block sale to be paid in cash and the rest in four-year installments. IPO oversees the sale on behalf of Iran Steel Pensioners Fund, according to Financial Tribune.

The Steel Pensioners Fund is pushing to liquidate nearly all its underperforming shares across industries, as it is struggling to support its pensioners. Steel industry retirees have repeatedly staged protests in front of the parliament and the Presidential Office in recent years over delayed pensions.

The fund’s 16.67% stake in Esfahan Steel Company is also set to be offered in March, priced at 750 rials per share and sold 10% in cash and the rest in eight-year installments. The price is 11% lower than ESCO’s current trading at 850 rials on over-the-counter securities exchange, Iran Fara Bourse.

ESCO is currently grappling with a 21.4-trillion-rial ($455 million) of accumulated losses with a nominal capital of 33.18 trillion rials ($706 million). Its financial condition has made it a less-than-desirable buy for investors, forcing Iranian Privatization Organization to cut down the price offer on its block sale every time for the past three years.

More than 1.7 billion shares in Ahwaz Rolling and Pipe Mills Company is scheduled to be offered in a tender on Feb. 25. The block sale will have a total value of 1.27 trillion rials ($27.21 million) with each share priced at 750 rials, 25% of which will be sold in cash and the rest in four-year installments.

After an unsuccessful attempt in January, Iranian Privatization Organization will offer 286 million shares or 11.44% stake in Amin Reinsurance on Feb. 28. Just like the last offering, the price will be based on that of the trading day before the sale’s close plus 20%, which is expected to be no less than 1,432 rials (about 3 cents), 30% of which sale will be in cash and the rest in installments over four years.

Moreover, 17.34% and 18.84% stakes in Alborz and Bahman insurance companies, which also failed to attract any buyer in early February, will be offered again on the equity market on March 3 on behalf of the Ministry of Economic Affairs and Finance. The base price for the two insurers will be the closing price on March 2 plus 20%, which is expected to stand at no less than 1,920 rials (about 4 cents).

The government sold 4.54 trillion rials ($98.27 million) worth of public companies’ shares to the private sector in the first 10 months of the current Iranian year (March 21-Jan. 20), Mehr News Agency reported.

About 3.95 trillion ($86.3 million) of the total figure were sold via tenders, while 102 billion rials ($2.28 million) were privatized on the capital market.

Iran Privatization Organization listed 337 public companies for their shares to be transferred in the ongoing fiscal year, out of which the ownership of 230 public entities was to be fully transferred to private owners.

The remaining 107 public enterprises were to see 80% of their shares transferred while 20% were to remain in the hands of the state.