Gov’t Offers Residue Stake in 1 Refinery, 2 Insurance Firms

EghtesadOnline: The government plans to offer its shares in Tabriz Oil Refining Company and two insurance firms, namely Alborz Insurance Company and Amin Reinsurance Company in the near future.

News ID: ۷۸۵۲۸۵

19 January 2020

According to separate notices published on the Iranian Privatization Organization website, the shares include 20% of the government stake in the refinery, 17.34% in Alborz Insurance and 11.44% in Amin Re.

Those interested are required to buy a whole block of 776.84 million shares of TORC worth 31.62 trillion rial ($238 million). Half the price should be paid in cash and the remaining in installments over two years, Financial Tribune reported.

Buyers interested in Alborz Insurance shares should pay 30% in cash for a block of 693.56 million shares worth 3.61 trillion rials. The remaining is to be paid in two-year installments.

Likewise, buyers of Amin Re need to buy a block of 343.19 million shares costing 1.67 trillion rials.  They should pay 30% in cash.

Shares are to be offered on over-the-counter Iran Fara Bourse. The time of offer is not known and IFB will announce the date.

Earlier, the IPO published similar notices offering shares in two major refineries, namely Shiraz Oil Refining Company and Lavan Oil Refining Company.

No Change

It merits mention that some companies were offered earlier but there were no buyers. Despite the fact that relevant officials had announced that they would tweak the divestiture procedures, nothing has changed with regard to the buying conditions in the latest offers.

The main sang in the previous approach was the obligation to buy a whole block of shares and buyers could simply not afford the multi-million-dollar deals.

Following several futile attempts to get rid of government shares in the offered companies, Economy Minister Farhahd Dejpasand had talked about plans to offer the remaining shares in smaller and affordable packages to “also let people with small savings to buy shares”.

In a similar vein, an ad hoc committee in charge of divesting government property said in December that the government’s remaining stakes in six refineries would be offered via a major exchange-traded fund.

The new ETF was dubbed as “Iranian Refinery Industry Investment Fund” and was supposed to function as a tool through which government assets would be offered in smaller and more affordable blocks.

An ETF can own hundreds or thousands of stocks across various industries (shares, stocks, bonds, oil futures, gold bullion and foreign currency) rather than only one, like a stock.

The new IPO notices apparently indicate that the divestiture body still prefers to stick to old procedures and is apparently unable or unwilling to innovate and find new ways to let the lethargic privatization process move forward as expected.