More Firms Line Up for TSE Block Sales

EghtesadOnline: The capital market’s last days of the current fiscal year (ending March 20) are usually the busiest in terms of block sales, and this year is no exception.

News ID: ۷۸۲۰۲۸

13 March 2018

Banks, mining companies and automakers are all lining up their major offerings on the market.

Tejarat Bank is the newest addition to the list. The lender, which has had its ticker on Tehran Stock Exchange frozen since July 18, 2017, has recently listed a 10% stake in Parsian Electronic Commerce Company amounting to 366.4 million for sale on TSE’s First Market at a base price of 3,031 rials (about 7 cents) per share. The sale is set to take place on March 19, the markets’ very last trading day this year.

Parsian provides e-banking services, which include debit card services, Internet payment systems and mobile phone electronic top-ups. The Tehran-based company operates as a subsidiary of Parsian Bank, another troubled lender barred from trading on TSE as of Nov. 5, 2017, according to Financial Tribune.

Another is Bank Melli Iran, coming forward with two new sales right after listing another sizable one a few days ago.

BMI, through its subsidiary Tose-e Melli Group Investment Company, is looking to sell a 75.56% stake in Tose-e Melli made up of 3.4 billion shares at a base price of 2,101 rials (about 5 cents) per share on TSE’s First Market. This sale is also slated for March 19.

Just like its parent company, TMICO has extensive stakes in a wide range of industries, including mining, food, oil, chemical, insurance, finance, energy, auto, industrial machinery manufacture, real estate and computer.

The bank also plans to sell a 15.48% block share in Pars Carbon Black Company on March 17, made up of 18.57 million shares at a price of 4,575 rials (10 cents) per share.

BMI recently listed a 70.68% stake in its investment arm TGMIC for sale on TSE on March 18, including 16.25 million shares at a base price of 3,701 rials (8 cents).

Outside the capital market, TGMIC is also planning to sell a 67% stake in National Industrial and Mineral Development Company on March 13 through an auction. NIMIDCO has extensive shares across the mining industry and would be an ideal purchase for companies aiming to expand their portfolios in the sector.

Market observers see Tejarat and BMI’s recent sales as attempts to become less of a business-owner and more of a bank, by adhering to articles 16 and 17 of the law on “removal of obstacles to competitive production and boosting the country’s financial system”.

The law mandates all banks and financial institutions to privatize at least 33% of their excess assets annually, especially those engaged in “non-banking activities”.

Bank of Industry and Mine has been the first and only bank this fiscal year to successfully sell off its excess assets on the capital market. The state-owned lender sold a 51% stake in its investment arm, Industry and Mine Investment Company in mid-February.

> IKCO Plans Two Sales

As for the auto industry, Iran’s largest automaker Iran Khodro has several sales lined up by its subsidiaries.

Iran Auto Parts Company and Iran Khodro Investment Development have put up a 50.2% stake in Mashhad Wheel Manufacturing Company made up of 223.39 million shares at a base price of 3,223 rials (7 cents). The sale is planned for March 17 and will be offered on TSE’s Second Market.

A 19.2% block share in Iranian Leasing Company is also on the table, comprised of 192.27 million shares sold by Iran Khodro Employees Cooperatives on March 14 at a base price of 2,653 rials (6 cents).

The planned sales are a sign of IKCO’s increased focus on cash-raising, as it also recently issued seven trillion rials (about $155 million) worth of Murabaha debt securities on TSE to purchase parts and raw materials required for its auto production. This was the largest volume of Islamic bonds the Iranian capital market had seen issued by one entity.

> An Expensive, But Tempting Stake in IZMDC

A block share in one of Iran’s largest zinc mining companies is scheduled to be offered on TSE’s First Market on March 11.

Four of Iran Zinc Mines Development Company’s shareholders, namely Ofogh Nili Khalij Fars Company, Khadamat Bazargani Ayandenegar Mehr, Mehr Eqtesad Iran Investment Company and Negin Sahel Royal, have put up a 50.03% controlling stake or 1.2 billion shares in IZMDC up for sale at a price of 6,614 rials (15 cents) per share.

IZMDC is on investors’ radar, as it has realized a near 53% return on investment during the first 11 months of the current fiscal year (March 21-Feb. 19) and has about 49% of its shares floating on the market.

The holding also has extensive shares in a wide range of industries, as it owns 57.31% of Calcimin Company, 56% of National Iran Lead and Zinc Company, 51% of Iran Mineral Processing Company and 17.75% of Shomal Shargh Shahrood Industrial and Mining Company.

Having a controlling stake in IZMDC will provide any buyer with vast interests in the sector.

The block sale’s price, however, is about 80% higher than the holding’s current trading price of 3,655 rials (8 cents) on TSE.

> Asia Insurance Company Offered for Third Time

Third time might be the charm for Asia Insurance Company, as Iranian Privatization Organization has so far failed twice to sell the insurer’s shares this fiscal year.

The organization’s latest attempt to privatize an 18.84% stake in the company on behalf of the government will take place on March 19. The base price is set at 1,920 rials (4 cents) and the total number of shares amounts to 433.39 million.

The Cabinet of President Hassan Rouhani’s administration approved a measure back in December based on which the government will sell its remaining shares in three major insurance companies, barring Iran Insurance Company but including Asia, Alborz and Dana.

Iranian Privatization Organization successfully sold the government’s shares in Alborz Insurance Company on Saturday. Its buyers, however, were anything but private, as a consortium made up of Civil Servants Pension Fund, Agricultural, Rural and Nomadic Pension Fund, and Social Security Investment Company purchased the 17.14% stake and increased its controlling share in the insurer to 51.27%.