Bank Saderat Iran, Bank Mellat and Tejarat Bank are three semi-private lenders that the government wants to fully divest.
Last year, the government tried but failed to sell its full stake in the three banks through an exchange-traded fund.
According to separate offer notices seen on the website of Iranian Privatization Organization, the total shares on offer are worth 210 trillion rials ($840 million), half of which are government shares in Bank Mellat alone.
Bank Saderat’s 8% shares will be on offer comprising 14 billion shares worth 36.36 trillion rials ($145.4m). Government shares in Bank Mellat are Sid to be worth 106.69 trillion rials ($426m) including 22.77 billion or 11% of the shares. Tejarat Bank will cede 10% of the shares worth 66.95 trillion rials ($267m).
Potential buyers can pay half the amount in cash and the other half in two-year installments.
Apart from the three banks, the IPO also plans to cede 38.13% of government stake in Pars Agro-Industry & Animal Husbandry Company. The block of shares is priced at 18.72 trillion rials ($74.8m).
While the government seeks to sell shares in one go, it has often faced challenges in finding buyers able and willing to buy the blocks of shares worth hundreds of millions of dollar.
Facing chronic budget deficits, the government appears to have no choice but to resort to block sale as the scheme to offer shares via ETFs also was not successful and was opposed by many quarters.
In May 2020 the government sold a portion of its stake in the three banks and two insurance companies via the ETF initiative. The ETF held 17% of the government stakes in Tejarat Bank, 17% in Bank Mellat, 18.32% in Bank Saderat Iran, 17.34% in Alborz Insurance Company and 11.44% in Amin Reinsurance Company making 58.86 trillion rials ($235m).
However, the ETF failed to meet targets set by the Economy Ministry both in the terms of buyers and the intended amount.
The government had expected to make 170 trillion rials ($680m) via the ETF units and perceived that at least 8 million people would show up. Less than 4 million retail investors took part.
In a similar case in September, the government tried to sell shares in four refineries via another ETF but managed to sell only 21% of the total.
As per available data 4 million people took part in the subscription for ETF units and sold 130 trillion rials ($520m) of the units. The government wanted to divest shares worth 600 trillion rials ($2.4 billion) in four refineries.
As per provisions of the 2021-22 budget, the government expects to generate 950 trillion rials ($3.8b) from selling its stake in state-controlled companies -- almost eight times the 115 trillion rials ($460 million) in the last year’s budget.