Sirjan Jahan Steel Complex Company (SJSCCO) will offer 10% of its stake comprising 4 billion shares at Iran Fara Bourse, the junior equity market, according to a notice published on the IFB website.
With prices ranging from 4,500-5,500 rials per share, the IPO is expected to generate 22 trillion rials ($80 million) for the metal company. Investors can purchase a maximum of 8,000 shares each. The IPO is the biggest of its kind in the present fiscal year that started in March.
A subsidiary of the National Pension Fund’s Iranian Copper Industries Company, the SJSCCO was founded in 2009 in Sirjan in southeastern Kerman Province.
The company produces 6 million tons of steel a year, including sponge iron, steel parts like billet, bloom and rebar.
Gol-Gohar Mining & Industrial Company and the National Iranian Copper Industries Company (NICICO) are the main shareholders of the company.
Arian Chimia Tech Industrial Group is the second company to go public today at the Tehran Stock Exchange.
The company is to offer 225 million shares accounting for 15% of its total stake. It expects to raise 5.17 trillion rials ($19 million), making it the 582nd company to be listed at the TSE.
It is involved in manufacturing and importing cosmetics, healthcare products and pharmaceuticals.
Both IPOs will employ the book building process in which an underwriter seeks to determine the price at which an IPO will be offered. Price discovery involves recording investor demand for shares before arriving at an issue price.
Under this framework, the IPO issuing price is discovered only after the closing of bidding period and shares are equally offered to bidders.
With the share market recovering from a deep rut, more companies are expected to go public. IPOs normally return in a big way amid frenzy of buyers competing for a bigger slice of stakes of listed companies.
The two new IPOs are accompanied by put option contracts for shares bought on the IPO day, ensuring investors that returns will be reasonable in the secondary trade.
A put option is a financial market derivative instrument that gives the holder the right to sell an asset at a specified price (the strike) by a specified date. Put options are most commonly used to protect against a fall in the price of a stock below a specified price.