Iran Launches Investment Fund For Foreigners As It Prepares For Eurobond Issue

VOL. XLV

No 27

8-July-2002

IRAN

Iran Launches Investment Fund For Foreigners As It Prepares For Eurobond Issue

In an attempt to attract foreign investment to Iran, a new fund is being launched in the coming weeks to allow foreigners to invest in the Tehran Stock Exchange (TSE). The EFG-Hermes Persepolis Fund, as it will be known, will be managed by Atieh Bahar Consulting of Iran and EFG-Hermes of Egypt and will target Iranian expatriates, as well as Arab and European institutional investors, who have until the end of July to sign up. The road-show for the fund took place between mid-May and mid-June in London, Switzerland and the Gulf. The fund will be registered in Brussels and listed on the Dublin Stock Exchange. About 90% of the fund’s capital will be invested in TSE-listed companies in sectors such as petrochemicals, infrastructure and pharmaceuticals, while the remainder will be put in government participation bonds, the main fixed-interest instrument traded in Iran.

An unnamed official of Atieh Bahar was quoted by Reuters on 2 July as saying “we have had quite a good response and a number of meetings with potential investors” and that “this is a fund for specialized investors, people who are typically investing in emerging markets, for institutional investors who understand there is a potential for extremely high return.” The TSE all-share index has risen 22% so far in 2002, compared to 23.4% in 2001 and 44.8% in 2000. The TSE has a market capitalization of some $11bn. According to the official the fund will have a minimum capital of €20mn and a maximum of €70mn.

Fund To Guarantee Iranian Exports

Meanwhile, measures are under way to guarantee Iranian exports to more than 80 countries. The Managing Director of the Export Promotion Bank of Iran, Nowruz Kahzadi, has announced that a fund is to be set up in the next two months to provide guarantees to Iranian exports. The government has earmarked $500mn for the fund from the Oil Stabilization Fund (OSF) to cover purchase orders from these countries, Mr Kahzadi added.

First Eurobond Imminent

Finally the launch of Iran’s long-awaited €300-500mn Eurobond is expected this week, following visits last week by Central Bank of Iran officials to a number of European capitals. Iran has mandated Commerzbank and BNP Paribas to lead manage the first bond issue since the 1979 Islamic revolution (MEES, 3 June).