Citing the outcome of a meeting of the ad hoc divestment committee, Hossein Qorbanzadeh said the IPO will officially announce terms of the divestiture in the coming days, according to shada.ir, the news agency of the Economy Ministry.
“The shares will be offered in three blocks,” he said without elaboration. “The company is a big player with several subsidiaries and controls almost 40% of the country’s petrochemical industry”.
Qorbanzadeh said the IPO has started negotiations with potential buyers and “competition for purchasing shares would be intense”.
The PGPIC is estimated to worth 3,500 trillion rials ($12 billion) with the government holding 18% stake. IPO says offering block of shares is better and has been decided premised on the belief that retail offering of the shares will be to the detriment of the stock market as it would undermine the liquidity flow in the crisis-hit market.
Block sale of shares in Iran has been tried and tested several times in the past but failed to achieve the desired results simply because under the dire economic conditions buyers are unable and unwilling to put up millions of dollars in such business.
Block trade typically involves a large numbers of equities or bonds at an arranged price between two parties.
They are sometimes done outside the open markets to lessen the impact on the security’s price. Given the size of block trade, individual investors are rarely involved.
Given the huge size of offers, Qorbanzadeh described the divestiture as the largest in the history of the privatization process in Iran.
PGPIC is the biggest consortium of Iranian petrochemical producers. With a market capitalization worth 2,898 trillion rials ($10 billion), the giant petrochemical complex is the largest company listed in Tehran Stock Exchange and the second largest in the Middle East. The company has 60 plus subsidiaries.
The divestment comes on the heels of government efforts to realize at least a part of its projected income in the national budget from divesting shares. As per the fiscal budget projections, the government expects to make 940 trillion rials ($3.3 billion) from divestments this year that ends in March 2022.
Of the projected income, the government has barely generated 7.02 trillion rials ($25million) in the first half of the current fiscal year (March 21-Sept 22).