First Iranian Startup to Make Debut on Share Market

EghtesadOnline: Tap30 company, a ride hailing app in Iran, is planning to go public becoming the first of its kind in Iran to trade on the share market.

News ID: ۷۸۷۳۵۷

27 November 2021

ICT Minister Isa Zarepour said Wednesday that the IPO would make debut at Iran Fara Bourse, the junior equity market, in the coming weeks.

Many startups wanting to join the bourse have been facing hurdles becsue by nature they have a dissimilar property and financial structure compared to the eligibility criteria of other companies.

Stock market officials say the barriers have now been removed. Commenting on the imminent IPO, Amir Hamouni, head of IFB, told state TV on Friday that “the guidelines for listing such companies are now finalized”.

“Startups can now join the stock market and we expect more companies to follow suit,” he was quoted as saying by Fars News Agency.

The popular video on demand platform 'Filimo' and the Cafe Bazaar, Iran's largest Android app store, have also applied, Hamouni said.

The primary difficulty with listing startups is that their assets cannot be identified and assessed precisely. Unlike other listed companies that own tangible assets, startups are largely intellectual property and brand names, which apparently cannot be assessed under normal valuation procedures.

Homouni said startups can go public under special conditions. In other words, a special procedure different from that for normal companies with clearly defined assets and financial structure will be in place for startups.

Under the framework, startups will be required to sell shares only to professional investors, namely mutual funds, instead of  the public via the popularly used book building method.

Under this method, used earlier for listing “risky” and small-size  companies, the price discovery is undertaken by the funds and is the base price for trade in the secondary market.

Furthermore, startups will have to put up “a big portion” of their shares as collateral with the IFB when they offer the shares.

“After the shares are offered, the collateralized stocks will be released and can be sold in the market,” Hamouni said.

The government has always welcomed the startups’ entry in the bourse and says it will support such firms given their gradually increasing role in the economy.

Support for tech firms are aimed, among other things, at curbing Iran's dependence on oil export and developing the technology ecosystem.